Stanbic IBTC Holdings PLC Annual report

Transcription

Stanbic IBTC Holdings PLC
Annual report
2013
1
Overview
Business
review
Annual report and
financial statements
Other
information
Contents
Overview
4
6
10
12
Our vision and values
Corporate profile
Our network
Recognition
Business review
18
22
26
30
56
60
62
64
68
72
74
78
84
88
Chairman’s statement
Chief executive’s statement
Economic review
Financial review
Executive committee
Personal and Business Banking
Case study – NBC
Case study – Erisco Foods Limited
Corporate and Investment Banking
Case study – Danone and Abraaj story
Case study – Power and infrastructure story
Wealth
Abridged sustainability report
Enterprise risk review
Annual report and financial statements
120
122
127
128
142
143
144
145
152
153
230
231
Board of directors
Directors’ report
Statement of directors’ responsibility
Corporate governance report
Report of the audit committee
Independent auditor’s report
Statement of financial position
Statement of profit or loss
Statement of cash flows
Notes to the annual financial statements
Annexure A
Annexure B
Other information
236
240
245
Management team
Branch network
Contact information
All results in this booklet are presented on an IFRS
(International Financial Reporting Standards) basis.
2
3
Stanbic IBTC Annual group financial statements for the year ended 31 December 2013
Balance sheet
analysis
Capital
management
Overview
Overview
4
6
10
12
Corporate profile
Our network
Recognition
Market and Shareholder
information
Other
information
4
5
Overview
Balance
sheet
analysis
Overview
Business
review
Annual report and
Other
information
To be the leading end-to-end financial solutions provider in Nigeria through innovative
and customer-focused people.
The values that underpin our strategy
Upholding the
highest levels
of integrity
Our entire business
model is based on
trust and integrity
as perceived by our
stakeholders, especially
our clients.
Growing
our people
Serving our
customers
Respecting
each other
Delivering to
our shareholders
Being
proactive
We encourage and help
our people to develop to
their full potential and
measure our leaders on
how well they grow and
challenge the people
they lead.
We do everything in our
power to ensure that we
provide our clients with
the products, services
and solutions to suit their
needs, provided that
everything we do for
them is based on sound
business principles.
We have the highest
regard for the dignity of
all people. We respect
each other and what
Stanbic IBTC stands
for. We recognise that
there are corresponding
obligations associated
with our individual rights.
We understand that we
earn the right to exist
by providing appropriate
long-term returns to
our shareholders. We
try extremely hard to
meet our various targets
and deliver on our
commitments.
We strive to stay ahead
by anticipating rather
than reacting, but our
actions are always
carefully considered.
Guarding
against
arrogance
We have confidence in
our ability to achieve
ambitious goals and we
celebrate success, but we
never allow ourselves to
become arrogant.
Working
in teams
We, and all aspects of our
work, are interdependent.
We appreciate that, as
teams, we can achieve
much greater things than
as individuals. We value
teams within and across
business units, divisions
and countries.
6
7
Overview
Balance
sheet
analysis
Overview
Business
review
Annual report and
Other
information
Corporate profile
Stanbic IBTC Holdings is a member of Standard Bank Group
(SBG), which is Africa’s largest banking group ranked by assets
and earnings. It has been in business for over 150 years.
With a controlling stake of 53.2% in Stanbic IBTC Holdings
PLC, Standard Bank employs over 48,000 people worldwide.
With headquarters in South Africa, it operates in 20 African
countries and 13 countries outside Africa, including key
financial centres in Europe, the United States and Asia.
Our strategy is to position ourselves as the leading endto-end financial services solutions provider in Nigeria. We
offer expert services in three business areas - corporate
and investment banking, personal and business banking and
wealth management.
With a team of experienced and client-focused staff, Stanbic
IBTC offers services which include specialised finance, trade
finance, stockbroking, trusteeship, global markets, custodial
services, asset and pension management, foreign exchange,
lending, savings and investment products.
Stanbic IBTC Holdings has the following eight subsidiaries:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
Stanbic IBTC Bank
(including Stanbic Nominees Nigeria Limited)
Stanbic IBTC Pension Managers Limited
Stanbic IBTC Asset Management Limited
Stanbic IBTC Stockbrokers Limited
Stanbic IBTC Trustees Limited
Stanbic IBTC Ventures Limited
Stanbic IBTC Capital Limited
Stanbic IBTC Investments Limited
Stanbic IBTC Bank offers a wide range of commercial banking
products through our 180 branches spread across every state
in Nigeria. We also offer self-service channels powered by
sophisticated technology to bring convenient banking to
clients.
Among our products are savings, current and domiciliary
accounts; high-yield current accounts; vehicle and asset
finance; MasterCard debit naira cards; Visa credit card, home
loans; insurance; mobile and internet banking; small- and
medium-scale enterprise (SME) loans and the award-winning
*909# MobileMoney. We also offer cash management and
transactional solutions complemented by electronic banking
solutions, custody services, foreign exchange, money market
and credit trading, and international trade services.
Custodial services are offered through Stanbic Nominees
Nigeria Limited, our custody arm and non-pension asset
custodian, which acts in a nominee capacity for clients’
transactions in securities and other investments.
We are a key player in financial inclusion and we are poised
to take banking to the doorsteps of our clients in different
personal and business categories who desire the banking
services.
Stanbic IBTC Pension Managers Limited is Nigeria’s largest
pension fund administrator by number of clients. It was
licensed by the National Pension Commission (PenCom) in
December 2005 to manage retirement savings in line with the
provisions of the Pension Reform Act of 2004. The company
has exceeded the 1,000,000 retirement savings accounts
(RSAs) benchmark and in 2013 had assets under management
of over N1.1 trillion.
The company also manages special schemes for certain
categories of institutions in the private sector and selffunded public sector that have regulatory approvals under the
Pension Reform Act.
Stanbic IBTC Pension Managers enables its clients to monitor
their retirement savings accounts through the convenience
of our automated teller machines (ATMs) and Stanbic IBTC
mobile app, thereby bringing services closer to clients. The
company enjoys a rich heritage derived from SBG’s extensive
and proven track record in money management and long-held
values of protection and enhancement of clients’ wealth.
Stanbic IBTC Asset Management Limited is a wholly-owned
asset management subsidiary of Stanbic IBTC Holdings and is
regulated by Nigeria’s Securities and Exchange Commission
(SEC). The company offers numerous products and services,
ranging from traditional asset classes (equities, fixed-income
securities, mutual funds and dollar-denominated investments)
to alternative investment options such as unquoted equities
and private equity opportunities. With seven mutual funds
under management, it is the largest independent (non-pension)
asset manager in Nigeria.
Stanbic IBTC’s mutual funds cater for individuals and
institutional clients who seek to earn competitive returns in
investment instruments in the capital market, by pursuing a
diversification strategy with even small amounts of investment
capital. Our mutual funds have outperformed market indices
and other mutual funds in Nigeria and remain the first choice
for discerning investors.
Stanbic IBTC Asset Management Limited manages:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Stanbic IBTC Nigerian Equity Fund (SINEF)
Stanbic IBTC Ethical Fund (SIEF)
Stanbic IBTC Balanced Fund (SIBAL)
Stanbic IBTC Guaranteed Investment Fund (SIGIF)
Stanbic IBTC Money Market Fund (SIMMF)
Stanbic IBTC Bond Fund (SIBOND)
Stanbic IBTC Umbrella Fund (SIUF)
Stanbic IBTC Nigeria Equity Fund is Nigeria’s largest mutual
fund. The Stanbic IBTC Money Market Fund is the country’s
highest rated fund with an AA(f) in 2013 by Agusto and Co.
This remains the highest rating conferred on a mutual fund in
Nigeria by the rating agency.
Stanbic IBTC Stockbrokers Limited is the wholly-owned
stockbroking subsidiary of Stanbic IBTC Holdings. Licensed
by the Securities and Exchange Commission, it commenced
operations in 1992.
The company was set up to provide world class stockbroking
services to local and foreign investors in the Nigerian capital
market. It is the largest stockbroker in Nigeria based on the
value of shares traded on The Nigerian Stock Exchange.
In 2012, Stanbic IBTC Stockbrokers Limited was appointed
stockbroker to the government by the Debt Management
Office (DMO) and also is one of the market makers on the
stock exchange. The company has acted successfully as
the stockbroker to other major primary market transactions
in Nigeria. It is positioned to remain Nigeria’s leading
stockbroking firm by providing exceptional service to clients
while living their values and operating with the highest level
of professionalism and integrity.
Stanbic IBTC Trustees Limited commenced operations in
January 2011. The company acts as executors and trustees
of wills, settlements and trusts of all kinds, whether made
by or on behalf of its clients or other parties. The company
also undertakes the execution of wills and trusts of all kinds
within Nigeria. It focuses on providing a best-value offering
to individuals and corporate organisations. It seeks to protect
interests in assets via timely execution of clients’ wishes to
ensure security and liquidity of trust assets.
Stanbic IBTC Ventures Limited was established to undertake
venture capital projects on behalf of the group. The company
applies its managerial and technical expertise in this area in
the development of businesses, helping our clients to achieve
their objectives.
Stanbic IBTC Capital Limited was incorporated as a limitedliability company in May 2012 owing to the restructuring in
Stanbic IBTC Bank. The company has a strong track record
of bringing local issuers to domestic capital markets. It is
one of the leading players in debt origination in Nigeria; with
expertise in structuring solutions customised to our clients’
specific requirements. The company provides services in the
debt capital and equity capital markets, which include initial
public offerings (IPO), follow-on public equity offerings,
private placements, rights issues and stock exchange listings.
Other services provided include advice in the financial, mining,
energy and infrastructure fields.
Stanbic IBTC Investments Limited was incorporated as a
limited liability company in May 2012. The company acts as an
investment company and the management and investment of
venture capital funds. Its offerings include property finance,
project and structured finance, financial advisory and real
estate finance.
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9
Overview
Balance
sheet
analysis
Overview
Business
review
Annual report and
Other
information
Corporate profile
Former structure
Stanbic Ibtc Bank Plc
70.6
Stanbic IBTC
Pension
Managers
Limited
99.9%
99.9%
Stanbic IBTC
Trustees
Limited
Stanbic IBTC
Nominees
Nigeria
Limited
Corporate and
Investment Banking
(CIB)
99.9%
99.9%
Stanbic IBTC
Stockbrokers
Limited
Personal and
Business Banking
(PBB)
Wealth
99.9%
Stanbic IBTC
Asset
Management
Limited
Stanbic IBTC
Ventures
Limited
Gross revenue
Gross revenue
Gross revenue
N58.5 billion
N34.0 billion
N18.7 billion
Corporate and investment banking
services to government, parastatals,
larger corporates, financial institutions
and international counter-parties
in Nigeria.
Banking and other financial services
to individual customers and small
to medium sized enterprises.
Investment management in form of
asset management, pension fund
administration and trusteeship.
New structure
Stanbic Ibtc Holdings Plc
Gross revenue
99.9%
Stanbic IBTC
Bank PLC
99.9%
Stanbic
Nominees
Nigeria
Limited
99.9%
Stanbic IBTC
Asset
Management
Limited
99.9%
Stanbic IBTC
Capital
Limited
99.9%
Stanbic IBTC
Stockbrokers
Limited
70.6%
Stanbic IBTC
Pension
Managers
Limited
99.9%
Stanbic IBTC
Trustees
Limited
Total income
99.9%
Stanbic IBTC
Investments
Limited
Wealth
17%
Corporate and
Investment Banking
52%
Wealth
22%
Corporate and
Investment Banking
48%
99.9%
Stanbic IBTC
Ventures
Limited
Personal and
business
banking
31%
Personal and
business
banking
30%
Total deposits
Gross loans and advances
Personal and
Business
Banking
48%
Corporate and
Investment Banking
52%
Personal and
Business
Banking
44%
Corporate and
Investment Banking
56%
10
11
Overview
Balance
sheet
analysis
Overview
Business
review
Annual report and
Other
information
Our network
Group overview
Market capitalisation
R209 billion
(USD20 billion)
48,808 employees
(2,077 in Nigeria)
Total assets
R1,694 billion
(USD162 billion)
1,283 branches
(180 in Nigeria)
Operating in
20 African countries
5
3
6
13
and 13 countries outside Africa
15
9,300 ATMs
(359 in Nigeria)
7
1
Angola
2
Botswana
3
Cote d’ivoire
4
DRC
5
Ethiopia
6
Ghana
7
Kenya
8
Lesotho
9
Malawi
18
1
9
20
11
12
10
2
11 Mozambique
16
12 Namibia
8
13 Nigeria
15 South Sudan
16 Swaziland
17 Tanzania
18 Uganda
19 Zambia
20 Zimbabwe
Branches
19
10 Mauritius
14 South Africa
Nigeria overview
17
4
14
ATMs
12 FCT Abuja region
21 FCT Abuja region
15 Lagos Island region
41 Lagos Island region
48 Lagos Mainland region
98 Lagos Mainland region
8
North Central region
16 North Central region
9
North East region
13 North East region
22 North West region
38 North West region
21 South East region
31 South East region
12 South South region
35 South South region
33 South West region
66 South West region
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13
Overview
Balance
sheet
analysis
Overview
Business
review
Annual report and
Other
information
Recognition
Awards and Recognition
1.Best Foreign Exchange Provider in Africa and Nigeria
Global Finance Awards 2013
4.Best sub-custodian bank in Nigeria 2013
Global Finance magazine awards
2.M & A Deal of the Year
The Banker’s awards (2013) for the Tiger Brand’s
acquisition of a 63 percent stake in Nigeria’s Dangote
Flour Mills
5.Bank of the Year
The Nigerian Auto Awards 2013 (On Wheels Auto
Awards 2013)
3.Structured Finance Deal of the Year
(The Banker’s awards (2013) for the USD150-million
Skye Bank Remittances Future Flow Securitisation
in Nigeria
6.Most innovative banking product
Stanbic IBTC Bank consumer loan (Businessday Annual
Awards 2013)
7. Best Investment Management Company in Nigeria
World Finance (awarded to Stanbic IBTC Asset
Management)
8. Best Investment Bank in Nigeria
EMEA Awards
9. Best Broker in Nigeria
EMEA Awards
10.Best Sub-Custodian in Nigeria
Global Finance Magazine at SIBOS
11.Best FX Provider in Nigeria
Global Finance Magazine at SIBOS
12.2013 Best Bank in Nigeria Award
Euromoney Real Estate Survey
13.The Most active Dealing Member Firm
(Stockbroking)
The Nigerian Stock Exchange CEO Award 2013
14
15
Business review
Overview
Business
Capital
management
review
Annual report and
Other
information
Business review
Business review
18
22
26
30
56
60
62
64
68
72
74
78
84
88
Chairman’s statement
Chief executive’s statement
Economic review
Financial review
Executive committee
Case study – NBC
Case study – Erisco Foods Limited
Case study – Danone and Abraaj story
Case study – Power and infrastructure story
Wealth
16
17
Overview
Business review
Chairman’s
statement
Business
Capital
management
review
Annual report and
Other
information
18
19
Overview
Business review
Chairman’s
statement
Within the banking industry, the main drivers during the year
were regulatory changes with the most significant being the
increase in cash reserve ratio to 50% imposed on public sector
deposits held by banks and the increase in the statutory
AMCON levy.
Against this backdrop, our company achieved many milestones
during the course of the year. Our banking customer base
crossed the one million customer mark, in line with our growth
ambitions. We will continue to leverage on economies of scale
to optimize costs, and to continue to provide best-in-class
service to our customers.
In addition, we were awarded with several accolades across
our group including the most active dealing member firm
at The Nigerian Stock Exchange CEO award 2013 and the
best Investment Management Company in Nigeria by World
Finance. These accolades were in recognition of our leadership
across asset classes within Nigerian financial markets.
Balance sheet
Dear Shareholders,
On behalf of the board of Stanbic IBTC Holdings PLC,
I am delighted to welcome you to the second annual
general meeting of our company since its restructure
into a holding company.
On the global economic landscape, the year 2013 was
dominated by widespread uncertainty on the back of recurring
concerns about growth in some areas of the Eurozone,
political instability in the Middle East and mixed signals about
quantitative easing/tapering in the United States.
By contrast, the Nigerian economy recorded GDP growth in
line with historical trends on the back of improved output
from non-oil sectors. In addition, the stability of the Naira
against international currencies led to increased confidence
by investors and the sustained flow of foreign portfolio
investments into the country. These positive indicators were
partially moderated by unrest in some parts of northern
Nigeria which dampened economic activities in those areas.
On the domestic capital markets scene, the All Share Index
of The Nigerian Stock Exchange appreciated by 47% in 2013
on the back of strengthening company fundamentals, positive
investor outlook and rising business confidence arising from
the successful privatisation of the unbundled electricity
distribution and generation companies which previously
belonged to the Federal Government of Nigeria via its
monopoly Power Holding Company.
The group’s total assets increased by N86 billion or 13%
from N677 billion to N763 billion at the end of 2013. This
growth was in line with our continued focus on growing
our balance sheet.
Atedo N Peterside CON
Chairman
“Our banking customer
base crossed the one
million mark, in line with
our growth ambitions.”
2013 statistics
Total assets
N763 billion
13% up
Annual report and
17% up
Other
information
The group’s net interest income increased by 10% from N34
billion in 2012 to N37 billion in 2013. This growth is largely
as a result of our focus on reducing our overall cost of funds.
Non-interest revenue grew by an impressive 42% from N34
billion in 2012 to N48 billion in 2013. This performance
was on the back of a strong showing from our Wealth
division as well as trading revenue earned by leveraging
off opportunities recorded in the market during the year.
Overall, the group’s profit after tax increased by 105%
from N10 billion earned in 2012 to N21 billion in 2013.
Following the interim dividend of 70 kobo per share already
paid to shareholders on 22 August 2013, your Directors are
pleased to recommend a final dividend of 10 kobo per share.
General
This annual general meeting is coming at the end of our first
full financial year since our reorganization into a holding
company structure.
We have focused our corporate social responsibility initiatives
around impactful sectors that align with our core beliefs and
support development in a Nigerian context; health, education
and economic empowerment.
The bank’s deposits from customers increased by N61 billion
or 17% from N355 billion to N416 billion at the end of
2013. This growth was largely driven by a focus on driving
appropriately priced deposits and reducing the average
cost of funds of the existing balance sheet.
We continue to demonstrate our commitment to excellence
in corporate governance with entrenched practices that
ensure that we run a profitable business in an ethical
and environmentally sustainable manner.
The Bank’s loans to customers also increased by N23 billion or
9% from N280 billion to N303 billion at the end of 2013. The
growth rate was muted due to the persistently high interest
rate regime.
I would like to use this opportunity to express our gratitude
to our shareholders, regulators, host communities, customers
and staff for the hard work and support that has enabled
us to achieve these results.
In line with the group’s robust risk management framework,
provisions were made for the loans and advances portfolio.
The total provision made was 4.4% of the loans and advances
book compared to 5.1% as the end of 2013.
In the coming year, we will continue to leverage on our core
strengths to ensure that we are able to provide even better
solutions to all of our customers’ financial needs.
Income statement
Customer deposits
N416 billion
Business
Capital
management
review
Stanbic IBTC Holdings PLC achieved gross earnings of N111
billion for the financial period ended 31st December 2013,
which represented an increase of 21% over the N92 billion
achieved in 2012. This was largely due to an exceptional
performance from increased transactional fee income
and growing investor flows.
Atedo N A Peterside con
Chairman
05 February 2014
20
21
Business review
Overview
Chief
executive’s
statement
Business
Capital
management
review
Annual report and
Other
information
22
23
Overview
Business review
Chief
executive’s
statement
Bank of the Year – The Nigerian Auto Awards 2013
(On Wheels Auto Awards 2013).
Best Bank in Nigeria (2013) – Euromoney Real Estate
Survey.
Best sub-custodian bank in Nigeria (2013) – Global
Finance Awards.
Best Investment Management Company in Nigeria
(awarded to Stanbic IBTC Asset Management) – World
Finance Awards.
Best Broker in Nigeria (awarded to Stanbic IBTC
Stockbrokers) - EMEA Awards.
The Most active Dealing Member Firm (awarded to Stanbic
IBTC Stockbrokers) – The Nigerian Stock Exchange CEO
Awards 2013.
Best Foreign Exchange Provider in Africa and Nigeria
(2013) – Global Finance Awards.
Dear Shareholders,
The Nigerian economy experienced growth and
macroeconomic stability in 2013, in contrast with a slowing
global economy; however this growth was partly constrained
by insecurity in some parts of the North which hindered
economic activities in those areas.
During the year, the domestic banking industry was largely
impacted by regulatory headwinds with an attendant
constraining effect on revenue streams for banks
in the medium term.
Against this backdrop, our group delivered a solid performance,
outperforming market expectations and further reinforcing
our commitment to building a profitable platform from which
we will create value for our shareholders.
Our group posted respective increases of 26% and 105%
over the prior year’s performance in operating income
and profit after tax. You will find included herein detailed
financial reports.
Sola David-Borha
Chief Executive
Best merger and acquisition (M and A) deal in Africa –
EMEA Finance 2013.
Best follow-on funding in Africa – EMEA Finance 2013.
“Our custody business
retained its market
leadership and reinforced
its role as the leading
non-pension custodial
service provider in Nigeria.”
2013 statistics
Profit after tax
105% increase
M and A Deal of the Year – The Banker’s Awards (2013).
Structured Finance Deal of the Year – The Banker’s
Awards (2013).
Most innovative banking product – Businessday Annual
Awards 2013.
We have continued to expand our customer touch points
across the nation, evidenced by the increase in the number
of branches to 180 and the deployment of 110 ATMs during
the course of the year taking our ATM footprint to 359. This
is in line with our strategy to provide our one million plus
customers with easy and convenient access to our services
across the nation.
The conclusion of our first full financial year since our
reorganization into a holding company structure in November
2012 resulted in operational efficiencies that have validated
our decision to restructure ourselves in this manner.
During the year, our MobileMoney platform was upgraded
resulting in a more robust solution with the capability to
support a larger number of concurrent users and fulfilling
our objective of improving our customers’ experience.
In addition, we deployed MobileMoney applications for
smartphones in order to further improve ease of access
to MobileMoney services.
As an indication of our leadership in our focus sectors, we were
awarded with several accolades during the year as listed below:
Our custody business retained its market leadership and
reinforced its role as the leading non-pension custodial service
on 2012
Business
Capital
management
review
Annual report and
Other
information
provider in Nigeria. This feat was underscored by a significant
growth in assets under custody by Stanbic IBTC Nominees
Limited (“SINL”) to N2.8 trillion. In addition, SINL continued
to set the pace within the custody industry; successfully
running a pilot of an industry first securities lending product.
Our asset management subsidiary, Stanbic IBTC Asset
Management Limited (“SIAML”) successfully integrated its
mutual fund offering onto the Quickteller payment platform
during the year, providing its customers with the ability to
purchase unit holdings conveniently. In addition, SIAML
launched an online redemption service for its mutual funds
to enable customers’ process redemptions promptly.
Our stockbroking subsidiary, Stanbic IBTC Stockbrokers
Limited (“SISL”) reaffirmed its market leadership by
remaining the top ranked broker on the floor of The Nigerian
Stock Exchange in 2013 by volume traded and value.
In addition, SISL’s appointment as stockbroker to the Federal
Government was renewed whilst they were also appointed
as a broker-dealer on the NASD OTC platform.
Our non-interest banking product continues to record
progress, ending the year with c.N2 billion in deposits.
We are continually developing innovative solutions to
meet the unique needs of customers in this segment. The
achievement of these milestones was due to the hard work
and dedication of our staff as well as the loyalty of our
esteemed customers.
In 2013, we recorded successes through an unrelenting
focus on cost control, deposit mobilization and responsible
asset growth; we plan to leverage on these efficiencies
in 2014 to ensure that we continue to grow our capacity
to provide financial solutions to our customers in a
sustainable manner.
Our outlook for the year is positive as we leverage
on our competencies to provide best-in-class service
to our customers while concurrently creating value
for our shareholders.
Sola David-Borha
Chief Executive
05 February 2014
24
25
Overview
Business review
Economic
review
Business
Capital
management
review
Annual report and
Other
information
26
27
Overview
Business review
Business
Capital
management
review
Annual report and
Other
information
Economic review
Samir Gadio – Head: Research
Global economic environment
Economic growth in emerging and developing countries
continued to drive global growth in 2013 which reached 3.0%
(2012: 3.2%). Latest International Monetary Fund (IMF)
figures suggest that growth in advanced economies slowed
modestly to 1.3% in 2013, from 1.4% in 2012, as a result of
sluggish economic activity in the Eurozone, despite the U.S
economy appearing to have ended the year on a stronger note,
especially when considering the decline in unemployment
levels (7% in late 2013).
The moderately improving macroeconomic environment
in the U.S prompted the Federal Reserve Bank (FED) at its
December Federal Open Market Committee (FOMC) meeting
to modestly reduce the pace of its asset purchases by USD10
billion, starting from January 2014. The committee signaled
that it will monitor information on economic and financial
developments in subsequent months, while employing
its other policy tools as appropriate, until the outlook for
the labor market has improved substantially. If incoming
economic data broadly supports the Committee’s expectation
of ongoing improvement in labor market conditions, with
inflation moving back toward its longer-run objective, “the
Committee will likely reduce the pace of asset purchases in
further measured steps at future FOMC meetings”. Having
said this, the committee reaffirmed its expectation that the
current exceptionally low target range for the federal funds
rate of 0% to 0.25% will be appropriate at least as long as the
unemployment rate remains above 6.5%.
Meanwhile, deflationary risks continued in the Eurozone with
the European Central Bank (ECB) having to cut the refinancing
rate to a record low of 0.25% in November in order to prevent
the economic recovery from stalling. In fact, ECB President
Mario Draghi stressed that the central bank still had an “easing
bias” with room to act if needed.
Growth in emerging markets and developing economies also
eased to 4.7% in 2013, from 5.0% in 2012, because of poorer
economic performances in India and China, at 4.4% and 7.7%,
respectively. Meanwhile, Sub-Sahara Africa’s growth remained
flat over the period, unchanged at 4.9% in 2013.
Global markets in 2013 were occupied by the outlook for
monetary policy in the US, as attention shifted away from the
Eurozone debt crisis, and focused more on FED taper talk.
Emerging market asset prices displayed increased volatility
following FED Chairman Ben Bernanke’s speech in May which
announced a possible turn in the pace of quantitative easing,
but recovered somewhat later in the year.
Commodity prices in 2013 trended moderately downwards
due to a combination of somewhat lackluster demand from
China, a switch out of commodities as an investment class in
favour of equities as well as the prospect of reduced global
liquidity conditions going forward. Indeed, gold bullion was
down 28% in 2013, but Brent actually proved resilient and
closed the year at USD110.8 pbl.
expanding 4.3% YoY, from 4.0% YoY in 2012. This is probably
as a result of various reforms which banks had to contend
with such as the gradual removal of Commission on Turnover
(COT) and total removal of ATM fees. Banks’ private sector
lending remained constrained in 2013 as various structural
bottlenecks had not yet been resolved.
Fiscal position
Political landscape
2013 was dominated by heightening political/election
engineering as the merger between the Action Congress of
Nigeria (ACN), Congress for Progressive Change (CPC) and
All Nigerian People’s Party (ANPP) finally came to fruition to
form the All Progressive Congress (APC). Additionally, further
infighting broke out within the ruling People’s Democratic
Party (PDP), with the formation of a New PDP faction (mainly
along north-south lines) and the resignation of a number of
governors and lawmakers who joined the opposition APC
party.
Economic growth
Growth in 2013 (rebased) was slightly higher than initially
expected under the old time series, at 7.4%, but broadly in
line with the previous 2012 estimate (6.7%). The GDP rebasing exercise resulted in a meaningful increase of the share
of services (51.9% [at current prices] vs 29.0%) in 2013. This
adjustment was reinforced by the telecoms and information
sector which saw its contribution to GDP rise to 8.7% from
0.9%, and the introduction of a motion picture, sound
recording and music production (Nollywood) sector, which
now represents 1.4% of GDP and was not previously captured.
Meanwhile, the share of agriculture declined post-rebasing
to 21.9% at current prices from an estimated 34.7% in 2013
under the old GDP series. There was also a drop in the weight
of the industry sector to 25.0%, from 36.3%, even though
the share of manufacturing actually increased (6.8% vs 1.9%).
Meanwhile, the share of crude oil and natural gas reduced from
32.4% to 14.4% on National Bureau of Statistics figures.
The drop in the share of crude oil is consistent with the
sectors negative growth in recent years (-0.5% in Q3:13, on
the old series), which mirrors a decline in output and limited
new investment in the sector. The passing of the Petroleum
Industry Bill (PIB) was held off and looks set to remain so at
least till after the 2015 elections.
On the old GDP series, the finance and insurance sector
underperformed overall non-oil growth again in 2013,
The freeze in recurrent expenditure in the 2012 and 2013
budgets is likely to be reversed in the 2014 budget, as
recurrent expenditure of N2.43 trillion in 2014 represents a
proportional increase from a 68% to a 72% share of spending.
This is as a result of increased allocation to pensions as well
as a high wage bill. In addition, provision for debt servicing is
up to N712 billion in the draft budget from N591.8 billion in
2013. The fiscal deficit –as a result of the GDP rebasing- is set
to be at 1.1%/GDP in 2014.
This is as the oil price is set to be marginally lower, with
government struggling with revenue leakages throughout
2013. Unlike the case during the approval process for the
2013 budget, the controversy over the oil price benchmark
was not repeated for the 2014 Appropriation Bill, as the
National Assembly has agreed on a price of USD77.5 pbl,
which is still lower than the USD79 pbl in 2013.
The lack of fiscal savings accretion in 2013 is worrying as the
Excess Crude Account (ECA) was depleted to USD3.2 billion
by December, after opening the year at USD9 billion. This
suggests that the fiscal breakeven point of the economy was
actually higher than the oil price benchmark. As such, Nigeria
remains vulnerable to oil boom and bust cycles in the long-run.
Exchange rate and interest rate dynamics
The Central Bank of Nigeria (CBN) pursued policies to ensure
exchange rate stability, as it sees USD/NGN as its nominal
monetary policy anchor. The apex bank maintained the view
that any meaningful devaluation in the currency would add
little to external competitiveness as oil exports still account
for c.95% of total exports. Besides, this would weigh
negatively on imported inflation and investment as well as
business confidence as experienced in the aftermath of the
global economic crisis in 2008/2009.
The CBN’s decision to reintroduce the Retail Dutch Auction
System (RDAS) and suspend the Wholesale Dutch Auction
System (WDAS), impose a cap on the amount of USD sales
by banks to the Bureau de Change (BDCs), as well as place
further regulations surrounding FX cash importation by banks,
contributed to the stability of USD/NGN from Q4:13. Despite
capital inflows basically drying up after FED taper headwinds,
outflows were indeed limited. However, the improved FX
picture has been at the expense of a wider spread between
the official (N155.7/USD1) interbank and parallel (N173/
USD1) rates over the period. The CBN’s steps to introduce a
restriction on the selling rate of FX by banks to BDCs to a max
of 1% above the interbank rate and place a cap on BDC sales
at an extra 2% above their buying rate did little to enable the
FX rates to converge.
Given the limited new portfolio inflows since Q2:13, foreign
reserves trended moderately downwards after reaching highs
of USD48.9 billion earlier in 2013 and eventually closed the
year at USD43.6 billion.
The Monetary Policy Rate (MPR) was held steady at 12% in
2013 while the general cash reserve requirement ratio (CRR)
was also left at 12%. Of note was the introduction of a 50%
special CRR on public sector deposits held by banks at the
22/23 July MPC meeting. This was aimed to address systemic
inefficiencies in liquidity management and reduce the banks’
ability to tap cheap government deposits to purchase higher
yielding treasury bills (T-bills) and Open Market Operations
(OMO). Interestingly, this tightening in effective monetary
conditions resulted in an initial back-up in T-bill yields;
however, this was not disorderly and subsequently dissipated
as the pace of new OMOs reduced.
Having said that, fixed income rates were responsive to global
market headwinds in 2013, especially from May when FED
Chairman Ben Bernanke suggested that the institution could
start tapering its asset purchases. This caused a sell-off across
emerging market asset classes with FGN T-bill rates drifting
higher as a result of foreign portfolio investors lightening up on
their holdings. For instance, the secondary market 91-d T-bill
yield was at 9.9% in February, but shut up to 13.8% by the
end of July. Market rates remained elevated in the remainder
of the year, albeit at slightly lower levels. For example, the
91-d T-bill closed 2013 at 12.5%. Bonds also reacted to the
FED taper talk coming out of the U.S, as yields on FGN bonds
backed up about 200bps as a result. FGN bonds closed the
year around the 13% level.
Inflation remained in single-digit territory throughout 2013,
starting the year at 9.0% YoY and moving steadily downwards
towards the end of the year to 8.0% YoY. Month-on-month
inflation remained extremely benign, reaching as low as 0.3%
in August.
28
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30
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Overview
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Financial review
Arthur Oginga – Group, CFO
The group’s diversified business and deep market
knowledge allowed us to weather the testing operating
environment in 2013.
This report provides:
An overview of the operating environment.
A general description of how the group generates
its revenue and the risks it faces doing so.
A description of the impact of the economic environment
on key financial ratios.
An overview of key features of 2013 financial results.
An analysis of the group’s financial performance.
An analysis of the results of the banking activities.
An overview of the financial performance of wealth and
investment banking businesses.
Commentary on the capital and liquidity position
of the group.
Most central banks maintained a cautious posture in 2013,
retaining or varying policy rates only slightly. Global inflation
was 2.3% in 2013 and it is estimated to rise to 2.7% in 2014
driven by the upward pressure on prices of major commodities.
Commodity prices declined slightly during the year as a result
of the switch out of commodities as an investment class in
favour of equities as well as the prospect of reduced global
liquidity conditions.
Domestic operating environment
Macroeconomic indicators in 2013 remained mostly consistent
with that of 2012. Key indicators such as gross domestic
product (GDP), inflation and exports, as well as capital market
indicators all moved in the positive direction.
The country’s average gross domestic product (GDP)
increased slightly to 6.8% in 2013 from 6.6% in 2012. Growth
rate of 7.7% was achieved in 4Q 2013, which was higher than
the 6.8%, 6.2% and 6.6% recorded in 3Q 2013, 2Q 2013
and 1Q 2013 respectively. The GDP was driven primarily by
growth in the non-oil sectors, with agriculture; wholesale and
retail trade; and services being major contributors.
Contribution to GDP by sector
An overview of finance function’s priorities for 2014.
Overview of operating environment
Global operating environment
The world economy recorded a 2.9% growth in 2013 (2012:
3.2%), driven principally by growth in the emerging and
developing economies. Advanced economies achieved a 1.3%
growth, down from 1.5% recorded in 2012, despite the strong
showing of the US economy in the latter part of the year.
The quantitative easing measures by the US Federal Reserve
(FED) helped to restore momentum to the US economy
and contributed to the improvement of the Eurozone
economy in 2013. The US economy grew by 1.9%, while
the Eurozone recorded a negative growth of 0.3% in 2013.
The emerging and developing economies growth decelerated
marginally to 4.5% from 4.9% in 2012 on the back of
reduced economic performances in India and China. SubSahara Africa’s growth remained broadly flat at 5.0% from
4.9% in 2012. It is expected that the emerging markets
that were major beneficiaries of cheap funding from the
FED stimulus could experience financial market instability in
2014 as tapering begins, although the US authorities have
made it clear that they remain sensitive to the impact of
their domestic policies on global markets and will therefore
aim to minimise disruptions.
Real
estate and
construction
3.6%
Wholesale
and retail
19.2%
Finance and
insurance
2.8%
Telecommunication
7.8%
Others
8.5%
Agriculture
41.9%
Crude petroleum
and natural gas
12.5%
Manufacturing
3.6%
Oil prices, though marginally volatile, remained largely
favorable, staying above the 2013 federal government
budgeted benchmark of USD79 per barrel. However, during
the year, the nation’s oil sector suffered some disruption
due to oil bunkering and pipeline vandalism, which adversely
affected oil production output. The daily oil production
declined from 2.52 million barrel per day (mbpd) at the
beginning of the year to 2.26mbpd at the end of 2013.
The reform in power sector culminated in the privatisation
of the sector in 2013. With the privitisation concluded, it is
expected that the sector will contribute significantly to the
economy in the medium to long term. Also, the agricultural
transformation initiative embarked upon by the government
and the proposed reform of the oil sector would positively
drive the country’s growth.
special CRR on public sector funds in July 2013. This was aimed
to address systemic inefficiencies in liquidity management and
reduce banks’ ability to tap cheap government deposits to
purchase higher yielding --bills and Open Market Operations.
Consequently, both the weighted average inter-bank call and
Open-Buy Back rates opened at 11.7% in December 2012 but
closed at 10.9% and 10.5% respectively in December 2013.
The nation’s foreign reserves stood at USD43.6 billion at the
end of 2013. This represents a 1.4% decline over the USD44.2
billion recorded in 2012. The decline is attributable to the
central bank (CBN) stance to protect the Naira to ensure
foreign exchange stability. The foreign reserves reached
the peak of USD48.9 billion in April 2013.
In the capital market, the bullish run that started in the
second half of 2012, continued with greater impetus in 2013.
Total market capitalization increased by 29% from N14.8
trillion at the beginning of the year, to N19.1 trillion on the
last trading day of 2013. Overall, the Nigerian Stock Exchange
All share index (NSE ASI) grew by 47% from 28,078.8 at the
beginning of the year to 41,329.2 at the end of December.
The equities market performance could be attributed to
factors such as the rub-off effect of the 2012 year end
results; impressive valuation of blue chip companies; growing
investors’ confidence; and significant increase in capital
inflow and portfolio investment as well as the tight regulatory
oversight by the Securities and Exchange Commission (SEC)
and the NSE.
Relative stability was achieved in the exchange rate as it
traded largely within the CBN target of N155-160/USD1. The
pressure on the Naira, as a result of capital outflows in 2Q
2013, necessitated the CBN selling foreign exchange (FX)
directly to banks, while increasing supply to the Wholesale
Dutch Auction System (WDAS) to defend the Naira. The
CBN reintroduced the Retail Dutch Auction System (RDAS)
and suspended the WDAS, placed additional regulation on
FX cash importation by banks and imposed a limit on the
amount of foreign exchange sales to the Bureau de change
(BDC) operators in the second half of 2013 to ensure the
stability of Naira. Consequently, the end-period exchange
rate remained stable at the RDAS and interbank segments but
depreciated significantly at the BDC segment. The exchange
rate at the RDAS opened at N157.33/USD at the start of
2013 and closed at N157.26/USD, while the inter-bank
selling rate opened at N156.25/USD and closed at N159.90/
USD, representing a depreciation of 2.4%. However, at the
BDC, the selling rate opened at N159.50/USD and closed at
N172.00/USD, representing a depreciation of 7.8%.
The moderation in inflationary pressure, which began in the
4Q 2012, continued in 2013. The year-on-year headline
inflation fell consistently from 9.0% at the beginning of the
year to 8.0% at the end of 2013. Similarly, core inflation
declined from 11.3% in January to 7.9% in December 2013.
This is the first time the country has achieved a single digit
inflation rate since 2007. The moderation in domestic price
level was largely due to the tight monetary policy stance
coupled with the relatively stable exchange rate regime.
Interest rates in all segments of the money market reflected
the liquidity conditions in the banking system. The Monetary
Policy Rate (MPR) was retained at 12% throughout the year
as it was in 2012, with a symmetric corridor of +/- 200 basis
points, thus effectively maintaining the Standing Lending
Facility (SLF) and Standing Deposit Facility (SDF) rates at 14%
and 10% respectively. Alongside the existing Cash Reserve
Requirement (CRR) of 12.0%, the CBN introduced a 50%
The on-going reform of the banking sector continued in 2013
with measure such as financial inclusion, cashless banking,
implementation of International Financial Reporting Standards
(IFRS), risk-based supervision, release of exposure draft for
Basle II/III and other sustainable banking practices introduced
and/or reinforced during the year.
How the group generates its revenue and key
risks that it faces in doing so
The group generates its revenue from three broad sources:
net interest income;
fee and commission revenue;
trading revenue; and
income from wealth business.
Net interest income represents the difference between
interest received by the group on money lent to customers
and other banks as well as funds otherwise invested in
government securities, and the interest paid by the group
to depositors and other providers of finance. Funds lent to
individual customers include mortgage loans, instalment
sale and finance lease on vehicles and other assets, as well
as credit card facilities. Corporate loans include corporate
lending facilities, structured finance, project finance
and trade finance.
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Financial review (continued)
Interest rates charged are determined by considering the
factors that influence the risk that the customer will not repay
the funds advanced. Deterioration in this risk, otherwise
known as credit risk, is reflected in credit impairment charges
in the group’s income statement.
The group requires funding for its lending and investment
activities. Funding is obtained in the form of deposits placed
by customers on which interest is payable. The interest rates
on deposits are dependent on the term and size of the deposits
and macroeconomic variables. Interest rates on assets (loans)
and liabilities (deposits) do not necessarily reprice at the same
time and assets and liabilities consist of both fixed rate and
floating rate instruments, resulting in interest rate risk
to the group.
In addition to supporting tier I capital adequacy, the group
uses its shareholders’ funds to finance both equity-related
investments and a small portion of the loan book. Shareholders
require a return in the form of dividends and growth in
share price. No interest is paid on shareholders’ funds. The
benefit of this ‘free funding’ is a significant contributor to the
“endowment effect” and reduces during times of declining
or persistently low interest rates.
Deposits placed on demand (current accounts) can be
withdrawn at any stage and banks therefore manage the
liquidity risk that could materialise if a significant portion
of total deposits is withdrawn without cash being available
to settle these withdrawals, or if deposits being redeemed
cannot be replaced with new deposits.
The group is required to hold minimum reserve balances with
the central bank and minimum amounts of liquid assets. Banks
are typically able to access liquidity from the central bank.
This is normally priced at a central bank repurchase rate which
is an important central bank-determined pricing trigger for
managing monetary policy.
Non-interest revenue consists of fee and commission
revenue and trading revenue, as well as a combination
of diverse other non-interest revenue sources.
Fee and commission revenue is generated through
transactional banking activities of corporates, small and
medium businesses and individual customers. These fees
and commissions are earned on banking transactions
through various channels, which include branches, ATMs,
telephone banking, point-of-sale devices and internet-based
transactions such as online business banking, internet banking
and trading products. The group also earns knowledge-based
fees from corporate advisory and loan structuring activities
as well as financial planning and equity broking services.
Trading revenue is generated from trading activities on
products such as foreign exchange, commodity, credit,
interest rate and equity products. These trading activities
are predominantly related to client flows and are managed
within the group’s risk tolerance levels. Through these
activities the group is exposed to market risk as market
prices on these asset classes may increase or decrease due to
external factors. This risk can be reduced through offsetting
trades with counterparties and other clients. The group
generates revenue through the margins earned on accepting
trading positions with clients and managing the net market
risk trading exposure within its trading operations. To earn
trading revenue, the group takes on and manages market
risk, counterparty credit risk included in credit risk and
operational risk arising from large and complex trading
operations.
Other revenue sources include gains on property and
dividend income from private equity and strategic investment
activities.
The wealth business focuses primarily on pension
administration and management, private non- pension asset
management as well trusteeship and estate planning. The
pension business managed through Stanbic IBTC Pension
Managers Limited is 70.6% owned by Stanbic IBTC Group,
while the asset management and trustee businesses,
managed through Stanbic IBTC Asset Management Limited
and Stanbic IBTC Trustees Limited respectively, are 100%
owned. The wealth business contributed 22% to the group’s
2013 total income. Fees and commissions are derived from
assets and funds under management and other investment
outlets including the capital market related activities. The
group’s wealth business is the largest institutional investment
business and number one wealth manager in Nigeria in terms
of assets under management, number of clients and revenue.
Returns to shareholders
The group’s shareholders are the primary providers of
capital. They carry the ultimate business risk should the
group’s operations not be sufficiently profitable or through
the erosion of value as a result of a decline in the group’s
share price. Shareholders are rewarded for accepting this risk
through biannual distributions from the earnings of the group
and the possibility of growth in share price. Share price growth
is dependent on the group’s ability to grow shareholders’
equity on an annual basis at a rate that exceeds the rate that
shareholders would expect for an investment with the risk
profile of the group and expected future growth in returns.
Impact of the economic environment on key financial ratios
The table below sets out the key financial ratios that drive the earnings and ultimately the value of the group. The table
also sets out the external economic factors influencing these value drivers assuming no management action, an indication of
how these economic factors influenced the performance of the group in 2013, and the expected impact of these economic
factors in 2014.
Key financial ratio
Economic factor impacting key financial ratio
Growth in loans and advances
Debt-to-disposable income level
Impact
on 2013
Expected
impact
on 2014
GDP growth
Interest rates
Net interest margin
Interest rates
Credit loss ratio
Number of insolvencies and liquidations
Collateral values
Growth in non-interest revenue
Growth in fee and commission revenue
GDP growth
Growth in trading revenue
Market trading volumes
Market price volatility
Growth in operating expenses
GDP growth
Effective tax rate
Corporate tax rates
Growth in long-term wealth business revenue
Equity market performance
Inflation rate
Growth in assets under management
Increase in economic factor/positive impact on group’s performance
Decrease in economic factor/negative impact on group’s performance
Neutral
Growth in loans and advances
Loans and advances represent the largest asset class on the group’s balance sheet. This asset class provides the group with its
largest source of revenue in the form of interest income and creates cross-selling opportunities in the form of transactional fees
and other related revenues. Growth in loans and advances within the risk levels accepted by the group is therefore essential
to increasing revenue.
Growth in loans and advances in the personal market in particular is dependent on customers’ ability to repay debt. The debt-todisposable income ratio provides a measure of the ability of households to service existing loans and also assume further debt.
Debt-to-disposable income levels are not expected to reduce significantly over the short to medium term. It is, however,
expected that a slow improvement in disposable income levels coupled with a moderate improvement in economic growth will
be positive for loan growth in 2014.
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Net interest margin
The net interest margin represents the profit margin between
the interest rate earned on lending products and investments,
and the interest rate paid on deposits and other funding.
Benchmark lending rates, such as the prime lending and
monetary policy rates (MPR) are key factors that cause variation
in the net interest margin. Within this variation, a key dynamic
is the impact of interest rates on transactional balances and
shareholders’ equity, termed the endowment impact.
During times when interest rates decline, banks charge lower
interest rates on lending products like home loans, vehicle
and asset finance, and card products. The interest rates on
the deposits in transactional accounts decline to a lesser
extent than the reduction in the interest rate earned on the
lending products. This mismatch results in a reduction in the
net interest margin. The outcome is referred to as a negative
endowment impact and will take place during times of declining
interest rates. When interest rates increase, as experienced
since 2011, the increase in the interest rate earned on the
lending products is greater than the increase in the interest
rate paid on deposits in transactional accounts, resulting in
an increase in the net interest margin and a resulting positive
endowment impact.
Equity invested by ordinary shareholders is a second form of
funding that gives rise to an endowment impact. As equity
bears no interest cost, and equity funding is used to partially
finance lending products that are prime-linked, the margin
between the interest earned on lending products and the
‘free’ or equity funding will increase when interest rates
increase and reduce when interest rates decline.
The high interest rate environment was sustained by the CBN
in 2013. MPR was retained at 12%, while the Cash Reserve
Requirement (CRR) was maintained at 12%. However, in
the second half of 2013, CRR for public sector deposits
was introduced at 50%, while that of private deposits was
maintained at 12%. This led to further contraction of net
interest margin, as cost of funding increases.
The endowment risk emanating from the anticipated turn
in the economic cycle is partially hedged as and when it is
considered appropriate, using derivative instruments such
as swaps and interest rate swaptions. Hedging strategies
also factor in the partial offset of the endowment exposure
by an improvement in the credit cycle. While net interest
income has been negatively impacted by the recent downturn
in rates, the group is well positioned for a rate
tightening cycle.
Net interest margin
%
14.00
12.0%
12.00
12.0%
12.0%
the volatility in the market. The group trades products, which
may or may not have quoted statistics on market volumes and
no single indicator can serve as a reasonable proxy for such
activity levels.
Effective tax rate
Growth in operating expenses
Growth in earnings from wealth business
Inflation is one of the key external indicators that places
pressure on growth in operating expenses over an extended
period. Numerous internal factors affect the growth in
operating expenses, such as growth in staff numbers, inflation
induced salary increases, investments in infrastructure and
business volumes. Average headline inflation decreased to
8.4% in 2013 from 12.2% in 2012, with favourable impact
on cost growth when compared to the previous years. The
inflation rate is expected to increase in the latter part of
2014 as it is a pre-election year, which will result in moderate
cost growth. The group will continue its focus of operational
excellence in order to manage cost growth within acceptable
levels.
Wealth’s earnings are dependent on numerous factors,
including growth in assets under management, favourable
performance of the capital and money markets. The
performance of the NSE has a direct impact on earnings from
the asset management operation. The NSE All Share Index
grew by 47% in 2013 and contributed significantly to growth
in the earnings of our capital market related businesses. The
quantitative easing by the US is expected to have a negative
effect on the NSE perfomance in 2014, as the market
is dominated by foreign investors.
Corporate tax rates remained unchanged and no significant
changes are anticipated in 2014.
10.00
8.00
6.25%
6.00
4.00
5.3%
4.9%
5.0%
2011
2012
4.9%
2.00
0
2010
Net interest margin
2013
Monetary policy rate
Credit loss ratio
The credit loss ratio is the credit impairment charge expressed
as a percentage of the loan balance and indicates the loss to
the group resulting from the inability of customers to repay
loans during the year. For every naira owed by customers, the
group on average incurred a loss of 0.9 kobo (2012: 2.5 kobo)
in 2013. Insolvencies and defaults recorded in the economy,
as well as debt-to-disposable income levels described earlier,
provide an indication of the stress that consumers and
businesses experience.
Key features of 2013 results
The results
The group delivered a positive set of results in 2013. Gross earnings increased to N111.2 billion, a growth of 21% on the prior
year, and for the first time in the last five years, ROE was in excess of 20%.
Financial results and ratios
We expect pressure in the level of insolvencies and defaults in
2014 as consumers continue to contend with the high interest
rate environment.
Growth in non-interest revenue
Non-interest revenue comprises mainly fee and commission
revenue and trading revenue. Growth in fee and commission
revenue is dependent on transactional banking volumes, which
are a function of economic activity and of the competitive
environment for banking services. In addition, regulatory
directives and inflationary increases in the cost base are
considered in determining increases in fee and commission
tariffs. Modest increases in GDP and inflation should support
growth in non-interest revenue.
Growth in trading revenue is largely dependent on trading
volumes and how volatility affects trading spreads. The
group’s trading revenue is substantially a function of client
trading volumes and the margin between offer and bid prices.
The group also takes advantage of opportunities arising from
Change %
2013
2012
Total income
Nmillion
26
85,232
67,410
Profit after tax
Nmillion
>100
20,773
10,157
Net asset value per share
Nmillion
13
943
833
Return on average equity
%
21.0
10.9
Return on average assets
%
2.9
1.6
Non-interest revenue to total income
%
56.6
50.2
Credit loss ratio
%
0.9
2.5
Tier 1 capital adequacy ratio
%
22.0
20.7
%
68.0
72.8
kobo
186
50
Cost-to-income ratio
Earnings per share
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Key features of the 2013 results that influenced the financial
results and ratios were:
Slow lending growth in corporate banking
Loans and advances grew by 9% despite the challenging
operating condition exacerbated by the high interest
rate environment and strong competition for top quality
corporate credits. This resulted in a 3% decline in
Corporate and Investment Banking’s loan book. Personal
and Business Banking’s loan book, however, grew by 27%.
Increased liquid assets requirement also had a negative
impact on lending activities. CRR for public sector
deposits was raised from 12% to 50% during the
year, although the increase had a little impact on
the group’s cost of funding as public sector deposits
accounted for less than 10% of total deposits
at the end of 2013.
Analysis of the Group’s financial performance
Deposits
Balance sheet analysis
Total deposits from customers grew by 17% on the back of a
21% growth in PBB deposit book and a 14% growth in that
of CIB. The group’s most stable and low cost funding source
– demand and savings deposits from PBB business was 28%
higher than the prior year, while that of CIB grew by 62%.
The group’s total assets stood at N763.0 billion at the
end of 2013. This represents a 13% growth over N676.8
billion recorded in 2012. The growth is driven by loans and
advances and liquid assets. The total assets were funded
primarily from deposits from customers, which accounted
for 55% of total assets.
Loans and advances
Loans and advances to customers grew by 9% to N303.3
billion and resulted mainly from 27% growth in Personal
and Business Banking (PBB) loans to customers. Corporate
and Investment Banking loan book decreased by 3%.
Growth in transaction volumes
Significant growth in transactional banking volumes and
activities were recorded in 2013. Increased transaction
volumes were also recorded in our non-banking business
in wealth, custody, investment banking and stockbroking,
with positive impact on the revenues.
Well positioned trading book
Trading revenue benefitted from increased transaction
volumes and correct reading of market movements
in interest rates, coupled with volatility in the foreign
exchange market.
Personal
and
Banking
Business
Nmillion
Corporate
and
Investment
Banking
Nmillion
Total
Nmillion
Overdrafts
18,577
14,949
33,526
Term loans
88,223
145,504
233,727
Instalment sales
and finance leases
18,084
9,303
27,387
Mortgage lending
8,667
-
8,667
Total loans
and advances
133,550
169,756
303,307
The ratio of non-performing loans to total loans improved
to 4.4% from 5.1% in 2012, driven by the reduction in nonperforming loans from N14.3 billion in 2012 to N13.4 billion.
Cumulative provision on non-performing loans improved from
10 to 101.1%.
91.6%
NPL ratio and provision adequacy
Improvement in credit impairment
Credit impairment benefitted from enhanced rehabilitation
and recovery capability as well as releases of specific
credit impairments held against a number of exposures
in the business banking and corporate market.
Change
%
2013
2012
Nmillion
Nmillion
21
197,898
164,031
Current deposits
28
98,550
76,793
Savings deposits
26
19,097
15,116
>100
8,863
1,799
2
71,388
70,323
Personal and Business
Banking
Call deposits
Term deposits
Loans and advances by business units
Continued pressure on margin
The MPR rate was maintained at 12% throughout 2013 by
the CBN, with resultant pressure on margin. Loan growth
was constrained by the high lending rate, while funding
continued to be influenced by the upward rate pressure.
Despite the headwind, our margin benefitted from
improvement in deposit mix as considerable low priced
deposits were gathered in 2013.
Deposits by business unit
101.1%
91.6%
14
218,454
191,388
Current deposits
62
99,770
61,731
Call deposits
>100
44,064
20,377
Term deposits
(32)
74,620
109,280
Improvement in asset quality
Non-performing loans declined by N0.9 billion despite
the N24 billion increase in loan book. It benefitted from
improved recoveries and loan collections.
46.0%
7.0%
0
2010
6.2%
2011
5.1%
2012
4.4%
2013
Provision adequacy
NPL/total loan
NPL/Total loas
Provision adequacy
Net interest income by business unit
Change
%
2013
2012
Nmillion
Nmillion
-
18,443
18,374
Corporate and
Investment Banking
23
16,622
13,496
Wealth
16
1,948
1,684
Net interest income
10
37,013
33,554
Non-interest revenue
17
416,352
355,419
The group is focused on generating low cost deposits to
improve funding cost.
Income statement analysis
The group delivered a 21% growth in gross revenue to cross
the N100 billion mark to N111.2 billion from N91.9 billion in
2012. Total income also grew by a respectable 26% during
the year. The growth in total income is supported by a 42%
growth in non-interest revenue and a 10% growth in net
interest income. Profit after tax was buoyed by the reduction
in credit impairment charges and a moderate growth in
operating expenses.
Net interest income
56.6%
PBB’s net interest income was adversely impacted by a
53% growth in interest expense driven largely by growth
in deposit book and customer’s preference for call
deposits. Call deposits, although is a lower priced deposit
than term deposits, grew significantly to N8.9 billion
from N1.8 billion in 2012. Wealth net interest income also
recorded a 16% growth driven by increased income from
money market activities.
Personal and
Business Banking
Corporate and
Investment Banking
Total deposits and
current accounts
Corporate and Investment Banking’s net interest income
increased by 23% to N16.6 billion on the back of a 9%
reduction in interest expense, while Personal and Business
Banking’s net interest income was flat at N18.4 billion. Wealth
net interest income grew by 16% to N1.9 billion.
The group’s net interest income was up 10% and was supported
by continued growth in lending activities, increased income
from investment securities, albeit at a lower yield than prior
year and moderate growth in interest expense. The interest
expense benefitted from improved deposit mix as the ratio of
low cost deposits to total deposits grew significantly to 52%
(2012: 43%) during the year.
Non-interest revenue increased significantly by 42% to N48.2
billion on the back of significant growth in fee and commission
revenue and trading revenue. Net fee and commission
revenue grew by 29% to N32.9 billion, while trading revenue
was up 84%. The growth in net fee and commission revenue
is supported by increased transaction volume, steady growth
in assets under management within the wealth business,
considerable growth in assets under custody and closure of
good advisory mandates in the investment banking business.
Trading revenue, on the other hand, benefitted from increased
customer transactional volumes, good reading of interest rate
movements and relative volatility in the foreign exchange
market.
Corporate and Investment Banking’s non-interest revenue
grew by 51%, and accounted for 51% of total group’s noninterest revenue, while Personal and Business banking’s noninterest revenue was up 34% and accounted for 14% of total
non-interest revenue. Wealth contributed 35% to total noninterest revenue, with non-interest revenue growing by 35%.
38
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10
Non-interest income by business unit
Change
%
Corporate and
Investment Banking
2013
Nmillion
2012
Nmillion
Operating cost and cost-to-income
Nmillion
%
57,948
60,000
51
24,599
16,334
34
6,909
5,154
Wealth
35
16,712
12,368
42
48,219
33,856
68.6%
75.6%
41,792
Composition of gross loans and advances
Mortgage
3% (2012: 4%)
Instalment sales
and finance leases
9% (2012: 11%)
Overdrafts
11% (2012: 10%)
90.0
49,103
50,000
Personal and
Business Banking
100.0
Overall, the group’s profit after tax improved by N10.5 billion
to N20.7 billion, thus, representing a 105% growth. CIB’s
profit after tax grew by 140% to N18.4 billion, while that of
Wealth grew by 50% to N8.4 billion. PBB’s loss after tax grew
from N3.0 billion in 2012 to N6.0 billion.
80.0
72.8%
68.0%
40,000
34,476
70.0
The group’s return on equity improved significantly from
10.9% in 2012 to 21.0% in 2013.
60.0
30,000
50.0
Analysis of the banking business results
40.0
20,000
30.0
Credit impairment charges
10,000
Credit impairment charges decreased by 61% to N2.7
billion, benefitting from resolution of delinquent assets and
improvement in debt collection capabilities. Corporate and
Investment Banking as well as Personal and Business Banking
recorded a 90% and 34% reduction in credit impairment
charges respectively during the year.
Movement in credit impairment charges
Specific credit
impairment charges
Provision for
performing loans
Total impairment charges
Recoveries
Credit impairment
charges
Change
%
2013
2012
Nmillion
Nmillion
(64)
2,474
6,816
48
745
504
(56)
3,219
7,320
30
(552)
(425)
(61)
2,667
10.0
0
2010
Operating expenses
2011
2012
2013
0.0
CIB’s operating expenses grew 21%, with cost-to-income
ratio improving to 50.6% from 57.9% in 2012. The major
driver of CIB’s cost growth is staff cost, attributable to the
continued investment in people and skills. PBB witnessed a
22% growth and recorded a cost-to-income ratio of 121.1%
(2012: 107.1%). Marketing and brand expenses, premises
maintenance cost as well as NDIC insurance expenses were
major drivers of operating costs in PBB.
Wealth however, recorded a 3% reduction in operating
expenses and consequently witnessed improvement in cost-to
income ratio from 46.8% in 2012 to 34.3%. Wealth operating
cost benefitted from the absence of regulatory induced
technology expenses incurred in 2012.
6,895
Operating expenses
The banking business is structured along two business
units; namely Corporate and Transactional Banking (CTB)
and Personal and Business Banking (PBB). The investment
banking business is carried out under a separate business
entity Stanbic IBTC Capital Limited.
Term loans
77% (2012: 75%)
Total assets in the banking activities of the Group increased by
11% to N725.1 billion. The main drivers of the growth were
loans to customers and banks, financial investments and cash
and cash equivalents. These accounted for 85% of total assets.
Gross loans and advances, were up 9%, with Corporate and
Transactional Banking (CTB) reporting a 3% decline, while
Personal and Business Banking (PBB) grew by 27%. The bank
grew its loan book responsibly in the light of the prevailing
high interest rate operating environment and competition
for good quality credit.
Asset quality continued to improve as the ratio of nonperforming loans (NPL) to total loans (TL) declined further
from 5.1% in 2012 to 4.4%. NPLs reduced by 7%, despite
growth in loan book. The reduction in NPLs is driven by the
decline in NPLs of mortage loans and term loans products.
CTB’s non-performing loans products decreased by 40%,
while the ratio of NPL/TL, improved from 3.3% in 2012
to 2.0% in 2013. PBB’s NPLs increased 15% as a result of
newly classified loans in the business banking. However, the
improvement in PBB’s ratio of NPL/TL to 7.5% from 8.2% in
2013 is occasioned by the increase in loan book.
10
Asset quality
10
Loans and advances
Nbillion
CAGR (2010-2013): 18%
20.0
%
8.0
Nbillion
Operating expenses by business unit
Operating expenses grew by 18% to N57.9 billion. The growth
is driven by the increase in staff cost and other operating
expenses. Staff cost grew by 20%, while other operating cost
grew by 17%. Cost-to-income ratio improved from 72.4% to
68.0% as revenue continue to grow faster than cost.
Balance sheet analysis
20.0
7.0%
350.0
Change
%
2013
Nmillion
2012
Nmillion
Corporate and
Investment Banking
21
20,844
17,264
Banking
22
30,703
25,258
200.0
Wealth
(3)
6,401
6,581
150.0
Operating expenses
18
57,948
49,103
100.0
279.5
300.0
303.3
15.0
7.0
16.6
14.3
6.2%
13.4
12.8
266.1
5.0
5.1%
4.4%
10.0
250.0
6.0
185.0
4.0
3.0
5.0
2.0
1.0
0
2010
2011
2012
2013
0.0
50.0
Taxation
Non-performing loans
0
The group effective tax rate benefited from tax exempt
sources during the year. The effective tax rate was 15.6%
in 2013 (2012: 11.0%). CIB’s effective tax rate improved to
8.6% from 20.0% in 2012, while PBB’s tax credit declined by
39%. Wealth effective tax rate deteriorated from 25.4% in
2012 to 31.6%.
2010
2011
2012
NPL/total loans
2013
The high lending rate resulted in a decrease of 18% and 9%
in mortgage loans and instalment sale and finance leases
respectively. However, overdrafts grew by 13%, while term
loans were up 12% and benefitted from growing customer
relationships.
Deposits and current accounts, increased by N59.5 billion
to N419.0 billion, thus representing a 17% growth. The
increase in deposits is attributable to the significant growth
in number of customers, a function of our ability to leverage
on our expanded network. The number of customers crossed
40
41
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the 1 million mark in 2013. During the year, the bank
made a conscious decision to reduce reliance on expensive
wholesale funding and focus more on gathering lower
priced deposits to improve cost of funding. This decision
resulted in a significant growth in demand deposits (42%)
and savings deposits (26%), with positive impact on cost of
funds. Deposit mix, which is the ratio of low cost and stable
deposits (current and savings) to total deposits, improved
from 43% in 2012 to 52%.
Funding mix
Other
liabilities
8%
The bank maintained a healthy level of capitalization above
the regulatory requirement in 2013. Total capital adequacy
was 18.3% (2012: 16.3%) at the end of year. The increase
is due to the growth in Tier 2 capital attributable to the
subordinated debt obtained during the second quarter of
2013. Tier 1 capital adequacy ratio improved slightly to 16.6%
from 16.3% recorded in 2012. These ratios are significantly
higher than the statutory minimum of 10%.
Borrowings
8%
Equity
10%
Trading
liabilities
9%
Deposits from customers funded 58% (2012: 55%) of total
assets in 2013.
10
Deposits from
customers
58%
Deposits
from banks
7%
Deposits and current accounts
(CAGR 2010- 2013): 31%
Tier I capital
63,130
59,148
Tier II capital
6,408
(129)
69,538
59,019
380,437
362,855
Tier I
16.6%
16.3%
Tier II
1.7%
-
Total
18.3%
16.3%
Total qualifying capital
Capital adequacy
450.0
419.0
400.0
359.5
350.0
287.2
300.0
250.0
186.1
Liquidity and capital; The bank’s liquidity remains strong
with liquidity buffers held for potential stressed conditions
in line with the group’s liquidity stress-testing philosophy.
Liquidity ratio was 87.8% at end of 2013 (2012: 45.5%).
This is above the 30% statutory requirement.
The bank’s capital is considered adequate to support business
risks and contingencies and to pursue growth opportunities
as they arise.
Liquidity ratio computation
150.0
100.0
50.0
0
2012
Nmillion
Risk weighted assets
Nbillion
200.0
2013
Nmillion
2013
2012
Nmillion
Nmillion
12,965
12,398
Specified liquid assets
2010
2011
2012
2013
Corporate and Transactional Banking’s deposits increased by
N25.7 billion to N221.1 billion, representing a 13% growth.
The increase is supported by growth in demand (62%) and call
deposits (116%) but adversely affected by the 32% reduction
in term deposits. The significant growth in demand deposits
resulted in improvement in deposit mix from 32% in 2012
to 45% in 2013 and reduction in cost of funding. Personal
and Business Banking’s deposit book grew by 21% to N197.9
billion benefitting from increased retail customers. Demand
deposits grew by 28%, while savings account was up 26%.
The growth in lower priced deposits improved to 64% from
57% in 2012.
During the year, the bank obtained a 7 year subordinated debt
amounting to USD40 million (N6.4 billion) to support funding
for foreign currency based lending.
Cash
Balance with CBN
(net DR/CR balance,
and excluding CRR)
Net balance held with
banks within Nigeria
83,922
16,246
Interest income on investment securities
Interest income loans and advances to banks
5,018
171,509
65,995
-
2,551
Federal Government
of Nigeria bonds
5,186
55,219
Stabilisation Securities
1,085
5,395
Interest income
274,677
162,822
Interest expense
Net Money At Call
with Other Banks
Total Asset (A)
Current liabilities
The bank witnessed a more than 100% growth in profit after
tax. The growth in profitability is driven by the increases in
net interest income, trading revenue, fees and commission
revenue, significant reduction in credit impairment charges
and favourable tax position.
Net interest income increased by 10% to N34.8 billion,
despite the testing operating environment. Interest income
grew by 7% and benefitted from continued growth in income
from lending activities, investment securities and interbank
placement. Income from loans and advances accounted for
71% of total interest income. This was made possible by the
growing customer relationships and growing suite of tailormade lending products being offered to customers. Income
from investment securities grew by 34% and accounted for
29% of total interest income. It benefitted from increased
transaction volumes and stable yields in government securities.
Interest expense grew marginally by 4% to N25.7 billion,
driven primarily by the growth in the deposit book. The effect
of the monetary policy tightening was somewhat moderated
by the improvement in deposit mix. The bank’s net interest
margins (net interest income as a percentage of total assets
less derivative assets), declined slightly to 4.8% from 4.9% as
a result of growth in total assets.
Breakdown of net interest income
9
Treasury Bills
Interest income loans and advances to customers
Medium term advances
Change
%
2013
2012
Nmillion
Nmillion
34
17,342
12,985
>100
3,161
366
(7)
40,026
43,070
(8)
26,029
28,150
Overdrafts
(5)
7,160
7,525
Home loans
(12)
1,832
2,073
(6)
5,005
5,320
7
60,529
56,421
Instalment sales and finance leases
4
25,727
24,818
Savings deposits
87
373
200
Adjusted deposit liabilities
312,695
357,474
Current accounts
55
694
448
Total liabilities (B)
312,695
357,474
Call deposits
(7)
2,741
2,948
87.8%
45.5%
3
19,754
19,190
Liquidity ratio A/B*100
Time deposits
Other interest bearing liabilities
Net interest income
7
2,165
2,032
10
34,802
31,603
42
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Corporate and Transactional Banking’s net interest income grew by 24% to N16.4 billion, supported by the growth in income
from investment securities and reduction in interest expense. Personal and Business Banking’s net interest income was flat at
N18.4 billion due to the growth in interest expense, a function of increased deposit book. CTB’s net interest margin expanded
to 3.7% from 3.4%, while that of PBB contracted from 7.1% in 2012 to 6.5% mainly due to increase in total assets.
Non-interest revenue increased by 25% during the year with net fee and commission revenue and trading revenue up 6% and
82% respectively. The limited growth in fee and commission revenue in 2013 is attributable to the movement of investment
banking revenues to Stanbic IBTC Capital (‘Capital’), as a result of the organisational restructuring of the bank in late 2012.
Other revenue was down by 94% as a result of the absence of dividend income received from the erstwhile subsidiaries of the
Bank, which are now the Holding company’s subsidiaries with effect from November 2012.
Net fee and commission revenue increased by 6%. The
following are the factors that impacted net fee and commission
revenue in 2013:
Net fee and commission revenue
Account transaction fees
Card based commission
Knowledge based fees and commission
Foreign currency service fees
Documentation and administration fees
2013
2012
Nmillion
Nmillion
6
11,688
10,978
1
3,543
3,495
>100
1,460
518
(16)
2,910
3,469
10
1,299
1,185
(27)
1,005
1,376
Electronic banking
50
241
161
Others
59
1,625
960
(395)
(186)
Fees and Commission expenses
Trading revenue
Foreign exchange
Interest rates
Credit
Other revenue
Dividend income
Other non-bank revenue
Total non-interest revenue
82
14,603
8,013
57
6,644
4,230
(14)
1,329
1,541
>100
6,630
2,242
(94)
135
2,134
(98)
34
2,114
>100
101
20
25
26,426
21,125
5
Credit impairment and credit loss ratio
Growth in the customer base resulting in increased income
from account transaction fees although the income
was somewhat affected by the regulatory reduction in
transaction fees such as commission on turnover, SMS,
ATM etc. during the year.
C
ard based commission grew in excess of 100% as a
result of increased turnover volumes, a larger account
base and higher merchant penetration.
Breakdown of non-interest revenue
Change
%
Credit impairment charges; decreased by 61% resulting in
improvement in credit loss ratio to 0.9% from 2.5% in 2012.
F
oreign currency service fees increased by 10% on the
back of improved client flows during the year.
E
lectronic banking revenue increased by 50% due to
higher utilization of Stanbic IBTC devices and growth in the
number of transactions, especially internet transactions.
Nmillion
%
10,000
3.0
2.5%
2.5
6,391
2.0
5,000
2,358 2,381
1,922
968
0
504
1.0
1.3%
0.9%
(2,167)
0.5
0.1%
(5,000)
1.5
745
2010
0.0
2011
2012
2013
Credit impairment charge on non-performing loans
Documentation and administration fees reduced by
27% as a result of regulatory induced reduction in fees
relating to lending activities.
The 16% reduction in knowledge based fees is
attributable to the significant reduction in revenue from
financial advisory services in 2013. Revenue generated
by investment banking business, such as structuring,
origination and advisory fees were reported under the
Stanbic IBTC Bank in 2012 but are now reflected under
Stanbic IBTC Capital in line with new Group structure.
The growth in Other fee and commission revenue by
59% is supported by commission received on government
bonds with the bank acting as agent.
Trading revenue grew 82% mainly due to the following
reasons:
F
orex trading benefitted from favourable trading
environment and grew by 57%.
C
redit trading revenue grew in excess of 100%
on the back of large hedging transactions for clients.
Reduced liquidity in the interest rate market resulted
in the 14% decline in credit trading revenue.
Credit impairment charge on performing loans
Credit loss ratio
Corporate and Transactional Banking’s credit impairment
charges reduced by 90%, while credit loss ratio improved
to 0.2% from 1.9% in 2012. Corporate loan impairments
benefitted from the non-recurrence of specific provisions
raised on 3 corporate clients in the prior year and improvement
in rehabilitation and recovery capabilities. Personal and
Business Banking’s credit impairment charges also witnessed
a decline by 34%, resulting in improvement in credit loss ratio
from 3.4% in 2012 to 1.8%. The resolution of some assets in
business banking aided the reduction.
Operating expenses; increased by 17% to N49.1 billion on
the back of a 12% growth in staff cost and 19% growth in
other operating expenses. Consequently, the bank’s cost-toincome ratio increased marginally to 80.2% from 79.4% in
2012. Personal and Business Banking as well as Corporate and
Transactional Banking reported increases of 22% and 13%
in operating expenses and cost-to-income ratios of 121.1%
and 52.1% respectively.
44
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Breakdown of the bank’s operating expenses
Staff costs
Salaries and allowances
Staff cost: below market loan adjustment
Equity linked transactions
Other operating expenses:
Change
%
2013
2012
Nmillion
Nmillion
12
19,218
17,164
11
18,395
16,632
(25)
245
327
>100
578
205
19
29,869
24,905
8
615
571
Depreciation
20
3,863
3,231
Information technology
24
3,161
2,554
Marketing and advertising
73
2,152
1,243
Premises and maintenance
(20)
3,010
3,767
29
1,140
885
>100
644
196
Training expenses
30
328
253
Stationery and printing
(9)
655
717
Insurance: AMCON, NDIC and others
64
5,430
3,321
3
1,015
985
(14)
4,153
4,848
>100
2,411
1,137
13
1,292
1,197
17
49,087
42,069
Communication
Security
Administration and membership fees
Travel and transportation
Professional fees
Provision on contingent and other known losses
Others
Total operating expenses
Staff cost and headcount is impacted by:
Other operating expenses is impacted by:
inflation adjusted salary increase for staff
higher depreciation cost due to impairments on leasehold;
market driven fixed remuneration increase for nonmanagerial staff, and
higher information technology cost for
competitive advantage in business efficiency;
recruitment of non-full time staff to drive sales
and customer acquisition
higher marketing cost due to new product and brand
awareness initiatives;
Full time staff headcount decreased by 8%, while the
headcount for non- full time staff grew by 20% to 2,147.
higher communication cost due to increase in business
volume;
Full time banking staff headcount by business unit
Increased regulatory and compliance related insurance
cost – AMCON sinking fund and NDIC deposit insurance;
Change
%
2013
2012
(11)
998
1,125
Corporate and
Transactional Banking
(16)
152
181
Enabling functions
(36)
305
473
(8)
1,355
1,475
Total
securing
Increased training cost to improve staff technical skills; and
Increased security cost due to network expansion and
increased focus on protection of bank’s resources.
Overview of the financial performance of
wealth and investment banking business
Total income by business units
Trustees
1%
Asset management
15%
Wealth business
The Wealth group comprises three companies namely:
Stanbic IBTC Asset Management Limited (SIAML)
for the management of non-pension assets;
Stanbic IBTC Pension Managers Limited (SIPML) for the
administration and management of pension assets, and
Pension
management
84%
Stanbic IBTC Trustees Limited (SITL) for trusteeship
and estate management functions.
SIPML is the largest company within the Wealth Group as
it contributes more than 80% of the group’s revenue, total
assets and assets under management.
The Wealth group closed the year as the largest wealth
manager in Nigeria in terms of revenue, assets under
management and number of clients. Two (SIPML and SIAML)
of the three companies under the wealth group maintained
their market leadership in 2013. The third company (SITL),
established in 2011, continued to make good inroad into
the trusteeship business and estate management.
The wealth group recorded a profit after tax of N8.4 billion,
representing a 50% increase over the N5.6 billion recorded
in 2012. The group’s profit after tax represented 40% of
the total Stanbic IBTC Group’s profit after tax. Wealth’s
profitability benefitted from continued growth in assets under
management, impressive performance of the Nigerian capital
market as well as thought through investment decisions.
Net interest income grew by 16% to N1.9 billion, on the
back of positive yields on investment securities, which was
strong enough to support positive return on the portfolios.
Non-interest revenue, consisting only net fee and
commission, grew strongly by 35% to N16.7 billion. The
growth is buoyed by the growth in assets under management,
a function of growth in number of clients and size of
contributions as well as the good performance of the stock
market during the year.
As a consequent of the good performance in net interest
income and non-interest revenue, total income increased
by 33% to N18.7 billion.
Operating expenses, which is inclusive of staff and other
operating cost, was down 3%. Staff cost grew by 17% as a
result of inflation adjusted salary increase. Other operating
costs declined by 15%, benefiting from non-occurrence of
one-off regulatory induced technology improvement that
existed in the prior year. Consequently, cost-to-income ratio
improved significantly from 46.8% in 2012 to 34.3%.
46
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Overview
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Investment banking business
Breakdown of profitability by entity
Pension
management
Nmillion
Asset
management
Nmillion
Trustees
Nmillion
Total Wealth
group
Nmillion
Total income
15,739
2,777
144
18,660
Profit before tax
10,775
1,414
43
12,232
7,357
1,001
28
8,386
Profit after tax
Total assets stood at N22.6 billion at the end of 2013, representing a 33% growth over 2012. Liquid assets accounted for over
70% of total assets.
The wealth group achieved a record assets under management (AuM) of N1.32 trillion to maintain its position as the largest
institutional investment business in Nigeria. This represents a 33% increase over the N990.9 billion achieved in 2012. A
breakdown of the group’s AuM shows that SIPML crossed the N1trillion mark to N1.16 trillion, thus achieving a 37% growth,
while SIAML recorded a 27% growth in AuM to N158.8 billion.
The wealth business also witnessed considerable growth in number of clients and products. The pension business achieved a
16% growth in the number of retirement savings accounts (RSA), ending the year with 1.22 million clients. The non-pension
asset management maintained a client base of about 35,000 in its mutual funds during the year. Many new products were also
launched during the year by the two businesses.
5
Assets under management and retirement savings account
‘000
Nbillion
1,400.0
1,221.0
1,157.9
1,200.0
The group’s investment banking functions and transactions
are managed through Stanbic IBTC Capital Limited, which was
incorporated in second quarter of 2012. These functions were
previously performed by and reported in the Bank. Stanbic
IBTC Capital is a leading investment bank in Nigeria and well
respected in the industry. It has participated in major deals
ranging from oil and gas, infrastructure and project financing
to debt and equity raising.
Financial performance
The investment banking revenue is made up of non-interest
revenue only as no lending activities are undertaken by the
entity. Fee and commission revenue is generated through
structuring, originating and provision of advisory services
on various transactions for clients.. Revenue growth was
particularly strong in the advisory, property group, debt
capital markets, and mining energy and infrastructure in 2013.
Net fee and commission revenue grew by 70%, while a more than
250% growth was achieved in trading revenue. The prior period
comparison is for 8 month (May-December 2012), starting from
when the date of the company’s incorporation. When the prior
period is annualized, net fee and commission revenue and trading
revenue grew by 15% and 145% respectively.
1,400
Breakdown of non-interest revenue
1,200
1,054.5
939.2
1,000.0
800
800.0
606.2
600.0
488.8
0
Asset management
91.4
93.6
2010
Pension management
2011
Net fee and
commission revenue
70
2,725
1,599
400
Corporate
advisory services
>100
2,418
914
200
Structuring fees
(50)
307
616
0
Others
(100)
-
69
>100
281
76
79
3,006
1,675
600
400.0
200.0
Change 12 month 8 month
%
Nmillion Nmillion
1,000
865.9
834.3
125.0
2012
158.5
2013
Retirement saving accounts
Trading revenue
Total non-interest revenue
Overall, the wealth group achieved a return on average equity of 65.2% in 2013, an improvement over the 52.6% recorded
in 2012.
Total income grew by 79% (annualized: 20%) to N3.0 billion.
The growth in total income was however muted by the
significant growth in operating expenses, as the prior year
cost allocation was done only in latter part of 2012. Cost-toincome ratio in 2013 was 50.2%
Overview of the group’s liquidity and capital
management
Liquidity management
Liquidity market overview
The group’s liquidity risk management framework is
designed to measure and manage the liquidity position at
various levels of consolidation so that payment obligations
could be met at all times, under both normal and
considerably stressed conditions. Under the delegated
authority of the board, the Asset and Liability Committee
(ALCO) sets liquidity risk policies in accordance with
regulatory requirements and international best practice.
The group’s overall liquidity risk has remained unchanged
over 2013 with continued active management of financial
resources within the group’s stated risk tolerance.
New term lending and investment activity are monitored
and priced to take into account liquidity costs of
anticipated regulatory changes that will impact the group.
CBN maintained its monetary policy tightening stance
throughout 2013. It retained the monetary policy rate,
liquidity ratio and cash reserve requirement at 12%, 30%
and 12% respectively. During the second half of the year,
a new cash reserve requirement of 50% was introduced
for public sector deposits, while the 12% was retained for
private sector deposits.
The average cost of wholesale funding continued to be
high as a result of the monetary policy tightening, with
adverse effect on margin.
Repricing of risk assets continued to be challenging in
CIB due to competitive pressures. However, this was
effectively done in PBB business segment.
Liquidity buffer
Portfolios of highly liquid marketable securities, over and
above prudential requirements, are maintained as protection
against unexpected disruptions in cash flows. These holdings
are considered in the context of internal stress tests and
discounts assumed on certain securities in a possible sale.
The amount of contingent liquidity required the group’s
liquidity risk standard is influenced by the nature of the
depositor, and the contractual terms of the deposit as well
as the prevailing and anticipated regulation.
The surplus liquidity holdings are managed taking into
account liquidity stress testing results and CBN regulation.
The unencumbered surplus liquidity amounted to N265.2
billion as at 31 December 2013.
48
49
Overview
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Group unencumbered liquity
Marketable assets
Short-term foreign
currency placements
Total unencumbered
marketable assets
Other readily
accessible liquidity
Total unencumbered
surplus liquidity
2013
2012
Nmillion
Nmillion
174,094
130,077
Depositor concentrations
Single depositor
Top 10 depositors
6,139
38,420
180,234
168,498
84,997
5,001
265,231
173,499
Structural liquidity requirements
Behavioural profiling is applied to assets, liabilities and off
balance sheet commitments with an indeterminable maturity
or drawdown period, as well as to certain liquid assets.
In respect of liabilities, behavioural profiling assigns
probable maturities based on historically observed customer
behaviour. This process is used to identify core deposits,
such as current and savings accounts. These core deposits,
although repayable on demand or at short notice, can be
considered stable funding based on their past behaviour.
In respect of assets, behavioural profiling is used to
identify additional sources of structural liquidity in the
form of liquid assets or assets that could be used to
generate liquidity within a specific time frame, and certain
contractually demand assets are profiled in order to
recognize inflow rates in realistic amounts.
Limits are set to restrict the cumulative liquidity
mismatch between expected inflows and outflows of
funds in different time buckets based on contractual and
behavioural analysis.
The behaviourally adjusted cumulative liquidity mismatch
remains well within liquidity risk appetite.
Diversified funding base
The group’s funding strategy is determined after reviewing
the group projected balance sheet, which includes taking
into account business unit forecasts, the group’s capital
requirements, the maturity profile of existing funding
and anticipated changes in the deposit base. Funding
requirements and initiatives are assessed in accordance
with the group ALCO requirements for diversification,
tenor and currency exposure, as well as the availability and
pricing alternative liquidity sources.
Concentration risk limits are used within the group to
ensure that funding diversification is maintained across
products, sectors, geographic regions and counterparties.
2013
%
2012
%
5
4
25
21
Primary sources of funding consist of deposits from a wide
range of retail and wholesale clients as well as long-term
funding. Deposit liabilities funded 55% of total assets in
2013.
Medium to long term funding from Development and
Financial institutions form part of our diversified funding
base. Funding from this source accounted for 10% of
total liabilities and decreased to N48.8 billion from N66.9
billion in 2012.
returns to shareholders. The capital management process ensures that each group entity maintains sufficient capital levels
for legal and regulatory compliance purposes.
During the year, the group implemented a capital allocation framework to encourage business functions to optimize capital
requirements by making a trade-offs between product lines. The increased focus on capital and muted growth in risk weighted
assets resulted in an improved capital position, with tier 1 capital adequacy ratio of 22.0% (2012: 20.7%) and total capital
adequacy of 24.5% (2012: 21.3%). The group complied with minimum capital requirements imposed by the regulators during
the period under review.
Computation of capital adequacy ratio
Group
31 Dec 2013
Nmillion
Group
31 Dec 2012
Nmillion
Bank
31 Dec 2013
Nmillion
Bank
31 Dec 2012
Nmillion
86,376
78,197
63,130
59,148
5,000
5,000
1,875
1,875
Share premium
65,450
65,450
42,469
42,469
Retained earnings
22,864
15,300
8,986
4,924
778
(2,341)
17,241
15,049
(7,716)
(5,212)
(7,441)
(5,169)
9,941
2,242
6,408
(129)
3,321
2,310
-
-
221
(68)
9
(129)
6,399
-
6,399
-
96,317
80,439
69,538
59,019
Total risk-weighted assets
392,888
377,992
380,437
362,855
On-balance sheet
360,162
346,011
347,711
330,874
Off-balance sheet
32,726
31,981
32,726
31,981
Tier 1
22.0%
20.7%
16.6%
16.3%
Tier 2
2.5%
0.6%
1.7%
0.0%
24.5%
21.3%
18.3%
16.3%
Total qualifying Tier 1 capital
Tier 1 capital:
Share capital
A 7 year tenor unsecured subordinated debt amounting to
N6.4 billon (USD40 million) was received during the year
to improve funding.
Liquidity stress testing and scenario analysis
Other reserves
Deferred tax asset and intangible assets
Anticipated on-and off-balance sheet cash flows are
subjected to a variety of bank-specific and systematic
liquidity stress scenarios. These stress scenarios facilitate
the evaluation of the impact of unlikely but plausible
stress events on liquidity positions.
The outcomes of the stress tests are reviewed by ALCO on
at least a monthly basis, and inform minimum liquid asset
portfolio requirements and liquidity contingency recovery
plans. The scenarios themselves are reviewed periodically
to ensure they remain valid.
Tier 2 capital:
Non-controlling interest
Available-for-sale reserve
Subordinated debt
Total qualifying /regulatory capital
Capital management
Capital adequacy
Capital management involves among other things,
monitoring and proactively anticipating trends or
movements in regulatory ratios. The Group is subject to
host of requirements by the Central Bank of Nigeria. For
the South African Reserve Bank (SARB) purposes, SIBTC’s
capital requirements are recomputed based on Basel II
Standardised approach rules for measuring Standard Bank
Group consolidated capital requirements. However, South
African rules do not impose a requirement on SIBTC to be
capitalised at these levels.
The CBN requires every licensed Bank operating in Nigeria
to have a minimum capital adequacy ratio (CAR) of 10%.
However, the Group’s CAR trigger has been set at 15%, while
the CAR risk tolerance level is set at 12%.
The group manages its capital base to achieve a prudent
balance between maintaining capital ratios to support business
growth and depositor confidence, and providing competitive
Capital adequacy ratio
The implementation of the treasury and capital management operating model during the year, will increase focus on enhancing
shareholder value by providing a financial resource management function, that is optimized, comprehensive and integrated
across capital, liquidity, ratings and portfolio management.
In 2013, the CBN released a guidance note on “The New Regulatory Framework for Prudential Supervision of the Nigerian
Banking System”. The guidance note essentially details the proposed prudential guidelines to move the supervisory framework
to Basel II and III.
The impact of the implementation of Basel II/III on the capital adequacy ratio is that it will:
result in increased risk-weighted assets/exposures, primarily due to introduction of operational risk, market risk, which
were not measured under Basel I rules.
result in disallowance of impairments for performing loans (General loan loss provision), which will negatively affect the total
qualifying capital and lead to reduction in capital adequacy ratio.
50
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The group’s act of compliance with the capital adequacy requirement in terms of South African banking regulations measured
on Basel II principles coupled with the risk governance structure and implementation of Enterprise Risk Management
framework as well as collation of loss data and stress testing, amongst others, have continued to reinforce the group’s readiness
for a regulatory regime that is anchored on Basel II principles from 2014.
Three-year review
Consolidated statement of financial position
CAGR
%
2013
2012
2011
Nmillion
Nmillion
Nmillion
2013
USDmillion
2012
USDmillion
2011
USDmillion
91
109,385
99,840
30,072
686
638
189
(22)
38,049
113,401
63,324
239
725
397
13
24,733
24,440
19,501
155
156
122
19
Assets – Banking activities
Group finance priorities in 2014
The group finance function’s priorities in 2014 are to:
facilitate strict control over costs to improve the group’s overall profitability and enhance returns to shareholders.
evaluate and respond appropriately to the implementation of Basel II/III.
ensure that the highest standards of execution are applied to the group’s corporate activity.
Cash and balances with central banks
Trading assets
Pledged assets
Derivative assets
(30)
1,526
1,709
3,081
10
11
Financial investments
24
123,457
71,629
80,762
774
458
507
Loans and advances
13
383,927
290,915
302,771
2,408
1,860
1,899
44
94,180
24,571
45,132
591
157
283
6
289,747
266,344
256,720
1,817
1,703
1,610
Loans and advances to banks
Loans and advances to customers
optimize the allocation of the key financial resources of capital and liquidity in order to improve the group’s return on equity.
Other assets
23
14,634
19,378
9,750
92
124
61
analyse the impact of and prepare for changes in accounting standards.
Current and deferred tax assets
67
7,441
5,169
2,668
47
33
17
(100)
-
-
5,033
-
-
32
(5)
21,948
23,989
24,161
138
153
152
15,373
8,745
-
96
56
-
Intangible assets
evaluate opportunities for further standardization, alignment of processes and efficiencies within the group.
ensure a seamless implementation of financial reporting systems.
continue to provide relevant and reliable financial information to the group’s stakeholders, including regulators,
tax authorities and shareholders.
Property and equipment
Investment banking
Wealth
30
22,573
17,604
13,384
142
113
84
Total assets
17
763,046
676,819
554,507
4,786
4,327
3,478
3
66,960
88,371
63,173
420
565
396
Liabilities – Banking activities
Trading liabilities
Derivative liabilities
20
1,085
772
749
7
5
5
Deposit and current accounts
25
470,718
386,135
299,787
2,952
2,469
1,880
>100
51,686
26,632
12,545
324
170
79
21
419,032
359,503
287,242
2,628
2,299
1,802
1
48,764
66,873
47,618
306
428
299
6,399
-
-
40
-
-
(5)
2,723
1,577
3,028
17
10
19
3
57,871
42,554
54,183
363
272
340
6,642
(3,217)
-
42
(21)
-
Deposits from banks
Deposits from customers
Other borrowings
Subordinated debt
Current and deferred tax liabilities
Other liabilities
Investment banking
Wealth
38
7,926
6,526
4,191
50
42
26
Total liabilities
19
665,412
591,168
472,729
4,173
3,780
2,965
Equity attributable to ordinary shareholders
9
94,313
83,341
79,867
592
532
501
Banking activities
-
70,580
64,188
70,674
443
410
443
9,086
8,075
-
57
51
-
Wealth
26
14,647
11,078
9,193
92
71
58
Attributable to minority interest
32
3,321
2,310
1,911
21
15
12
9
97,634
85,651
81,778
613
547
513
17
763,046
676,819
554,507
4,786
4,327
3,478
Equity
Investment banking
Equity
Total equity and liabilities
52
53
Overview
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Three-year review
Financial results, ratios and statistics
Consolidated income statement
CAGR
%
2013
Nmillion
2012
Nmillion
2011
Nmillion
Net interest income
14
34,802
31,603
26,836
20
26,426
21,125
Net fees and commission revenue
13
11,688
Trading revenue
28
Change %
2013
2012
Nmillion
>100
24,617
11,412
Total assets
Nmillion
13
763,046
676,819
Loans and advances (net of credit impairments)
Nmillion
9
289,747
266,344
Nmillion
17
416,352
355,419
%
4.9
5.0
%
56.6
50.2
%
68.0
72.8
Return on average equity (pre-tax)
%
27.7
14.4
Return on average equity (after-tax)
%
21.0
10.9
Return on average assets (pre-tax)
%
3.4
1.9
Return on average assets (after-tax)
%
2.9
1.6
2013
2012
USDmillion USDmillion
2011
USDmillion
219
200
172
18,385
166
133
118
10,978
9,208
73
69
59
14,603
8,013
8,845
92
51
57
(36)
135
2,134
332
1
13
2
16
61,228
52,728
45,221
385
333
290
Key performance indicators
(11)
(2,667)
(6,895)
(3,349)
(17)
(43)
(21)
Net interest margin
Net specific credit impairment charges
(10)
(1,922)
(6,391)
(2,381)
(12)
(40)
(15)
Portfolio credit impairment charges
(12)
(745)
(504)
(968)
(5)
(3)
(6)
Income after credit impairment charges
18
58,561
45,833
41,872
368
290
269
Operating expenses
14
(49,087)
(42,069)
(37,576)
(309)
(266)
(241)
9
(19,218)
(17,164)
(16,129)
(121)
(108)
(104)
18
(29,869)
(24,905)
(21,447)
(188)
(157)
(137)
Profit before tax
Banking activities
Other revenue
Total income
Staff costs
Other operating expenses
Profit before taxation
46
Taxation
9,474
3,764
4,296
60
24
28
655
1,536
(1,617)
4
10
(11)
Balance sheet
Basic earnings per share
kobo
>100
186
50
Net asset value per share
kobo
13
943
833
Nmillion
13
94,313
83,341
times
74
2.3
1.3
15.6
11.0
2,077
2,184
Shareholders' equity
Other indicators
Banking activities profit attributable
to ordinary shareholders
94
10,129
5,300
2,679
64
34
17
Wealth
Profit for the year
45
8,386
5,576
3,964
53
35
25
49
(2,163)
(1,289)
(976)
(14)
Attributable to non-controlling interest
(8)
(6)
Wealth profit attributable to ordinary
shareholders
44
6,223
4,287
2,988
39
27
19
2,258
(719)
-
14
(5)
-
18,610
8,868
5,667
119
56
36
Investment banking
Profit for the year
Attributable to group ordinary
shareholders
81
^ Figures included in the three year review have been restated where necessary to provide meaningful comparison of
performance over the years
Exchange rates utilized to convert the statement of financial position are: 2013: N159.08/USD1; 2012: N158.40/USD1 ; 2011: N155.69/USD1
Price-to-book (P/B ratio)
Effective tax rate
%
Average number of employees
%
(5)
55
Business
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Change
%
Financial results, ratio and statistics
2013
2012
Capital market statistics
Banking activities
Change %
2013
2012
47
41,329.2
28,078.8
Market Indicators
Balance sheet
Total assets
Nmillion
11
725,100
650,470
NSE All Share Index
Loans and advances (net of credit impairments)
Nmillion
9
289,747
266,344
NSE turnover
Nbillion
(84)
106.4
658.2
Nmillion
17
419,032
359,503
Average daily activity
Nmillion
19
429.2
359.5
Aggregate market capitalisation
Ntrillion
29
19.1
14.8
Equity market capitalisation
Ntrillion
47
13.2
8.98
Selected returns and ratios
Return on average equity (pre-tax)
%
14.1
5.6
Return on average equity (after-tax)
%
15.0
7.9
Stanbic share statistics
Return on average assets (pre-tax)
%
1.4
0.6
Share price
Return on average assets (after-tax)
%
1.5
0.9
High for the period
kobo
72
2,135
1,238
Loan to deposit ratio
%
72.4
77.7
Low for the period
kobo
6
1,100
1,041
Net interest margin
%
4.8
4.9
Closing
kobo
94
2,135
1,100
%
43.2
40.1
2,667
6,895
thousands
(17)
527,801
633,567
Nmillion
85
8,217
4,431.6
Nbillon
94
213.5
110.0
2013 (rebased)
%
2.5
2.0
1.5
1.0
0.5
Stanbic Share price
NSE All Share index
Banking Index
c13
ov
-N
02
02
-D
e
13
0
3
34.1
ct1
6.9
-O
%
02
Effective tax credit
Share price performance:
13
5.1
p-
4.4
-S
e
%
02
Non-performing loan to total loan
Market capitalisation
-A
ug
-1
3
17.4
02
18.3
l-1
3
%
-J
u
Total capital adequacy
Value of shares
02
16.3
-J
un
-1
3
16.6
02
%
-1
3
Tier 1 capital adequacy
Number of shares
ay
79.8
02
-M
80.2
r-1
3
%
02
-A
p
Shares traded
ar
-1
3
2.5
-M
0.9
02
%
3
Credit loss ratio
-1
>100
02
-F
eb
Nmillion
n13
02
-J
a
54
56
57
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Executive committee
Sola David-Borha
Yinka Sanni
Victor Williams
Demola Sogunle
Steve Ideh
Wole Adeniyi
Chief Executive:
Stanbic IBTC Holdings
Chief Executive:
Stanbic IBTC Bank
Executive Director CTB
Stanbic IBTC Bank
Chief Executive Stanbic IBTC
Pension Managers
Head: Internal Audit
Executive Director Business
Support Stanbic IBTC Bank
Obinnia Abajue
Chidi Okezie
Angela Omo-Dare
Nkiru Olumide-Ojo
Arthur Oginga
Babatunde Macaulay
Executive Director PBB
Stanbic IBTC Bank
Company Secretary
Head: Legal Services
Head: Marketing
and Communications
Chief Financial Officer
Head: Transactional
Products and Services
Opeyemi Adojutelegan
Funke Amobi
William le Roux
Yewande Sadiku
M’fon Akpan
Ag. Chief Compliance Officer
Head: Human Capital
Head: CIB Credit
Chief Executive Stanbic IBTC
Capital Ltd
Head: Group Risk
58
59
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and Business
Banking
Business
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Overview
In line with our earlier articulated strategic plan, the focus
of the business in 2013 was to scale up by growing our client
base across all lines of business with particular attention
to Personal Banking and SME. We were able to surpass the
one million customer mark within the year after acquiring
>360,000 new customers in the period. We will continue
to grow our active customer base to achieve desirable scale.
We continued to pay particular attention to our relationship
management capability and service delivery, ensuring that
every target customer is served by a relationship manager
and that customer experience within our branches and other
touch points continue to be consistent and reliable.
It has been an impressive year in our retail banking business,
having successfully assisted individuals and small businesses
to smoothen their cash flows with the provision of consumer
and small business loans to support their needs, our unsecured
lending position has reflected overall good credit behaviour
of benefitting customers. Our focus on providing consumer
finance was recognized in the course of the year when our Bank
won best Vehicle and Asset Finance Bank at the On Wheels
Motor Industry awards for the third time in a row and the Most
Innovative Bank by Business Day newspaper for our focus
on those market segments.
Our transactional banking offering continues to be popular
with our growing customer base. This has also been spurred
by the CBN’s cash lite initiative and the proliferation of many
electronic alternatives that support client convenience.
Channel expansion and efficiency was therefore in focus in
2013 as we grew our ATM complement by 42% to close at
359 deployed machines at the end of the year. Our machines
continue to be known for reliability in the market, having
maintained a 95% minimum uptime across our infrastructure,
with higher availability during peak periods. Our Point of Sale
terminals were also more efficient as we focused on improving
utilization, growing from about 13% active ratio to about 28%
compared to industry ratio of 10%. Although for strategic
and operational reasons, we were not very aggressive in
growing our Mobile Money client base, we still achieved a
client base of c800,000 with transactions valued at N7 billion
during the year.
With the progressive rollout of cash lite Nigeria and
understanding that the way customers interact with financial
services is changing, we have added an all-inclusive digital
solution to enhance customer convenience. Our Group
app was developed to provide end-to-end financial service
to individual customers of Stanbic IBTC Group. Available
services on the platform include Mobile Money, Banking
services, Pension and Mutual Fund services with airtime
and other value added services, provided in a safe environment.
The Bank commenced the development of an Agent network
and has already grown its agency network to >2,000 within
the period. Agency banking allows us to further extend
our distribution network and offer banking and other value
added services to both banked and unbanked customers
across the country. We believe that this network will prove
particularly useful in the new world of privatized electricity
operations. We must now focus on driving awareness
in the marketplace to derive the benefits of efficiency
expected from the channel. This is also consistent with the
CBN’s goal of financial inclusion and serves well
as a part of the MobileMoney ecosystem.
Business performance
We continue to gather momentum in the business focusing
on the growth and efficiency of our balance sheet.
Given our existing investments and cost base, our focus
is on achieving a stronger top line while managing
our expenses appropriately.
Financial Performance
Total income
2013
2012
Nmillion
Nmillion
Growth
%
25,351
23,528
8
Staff costs
(13,366)
(12,685)
5
(17,337)
(12,573)
38
(2,344)
(3,566)
(34)
Tax provision
1,689
2,286
(26)
Loss after tax
6,007
3,010
100
Deposits
197,898
164,031
21
133,550
105,055
27
Provision for risk assets
Outlook for 2014
We plan to continue to grow our business with focus on
acquiring more customers across our chosen client segments
as the importance of scale cannot be over emphasized
in the growth phase that we are in. In addition, we will
maintain our focus on Customer Relationship Management
and improving operational efficiency through effective
channel management.
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Case Study
“A very happy work place banking relationship”
Nigeria Bottling Company (NBC)
A very happy work place banking relationship
It was a great opportunity gone bad. We had a series
of complaints and very unhappy customers.
In a show of increasing confidence in our work place banking
proposition, Stanbic IBTC re-launched the work place banking
offering in Nigerian Bottling Company. We went in to meet
with the top executives; we listened to the issues and gave
a commitment to resolve all the issues within a timeframe.
We kept our promise and we wowed them.
This re-launch of the group scheme involved the regularization
of existing accounts and the acquisition of new employees of
Nigerian Bottling Company through our salary domiciliation
and loan offering agreement platform. We got their attention
and they came on-board.
To date, Nigerian Bottling Company has grown to become one
of the key and strategic customers of the bank in the Personal
Banking space. The bank has been able to acquire about 60%
of the senior staff workforce and we have recently gotten the
go ahead to bank their entire junior staff workforce – over
3,000 staff and we have started the acquisition of these
customers on to our books.
Our relationship with the organisation and its employees has
grown tremendously as exemplified in the recent transfer
of their junior staff loan scheme to us outrightly from
a competitor.
The benefits of a well-managed work place banking
proposition impacted positively on our CIB business. During
the year under review, our share of the client’s Corporate
banking business doubled from 8% in the 2012 FY to 16%.
Our pension business also continued to witness immense
patronage from Nigerian Bottling Company, with 60% of
the entire workforce of NBC using Stanbic IBTC Pension
Managers as their Pension Fund administrator as new
employees continue to join.
“Your bank, Stanbic IBTC,
is a brand that has come to
stay in the Nigerian Bottling
Company because of its
responsiveness, transparency
and integrity”
These are the words of a senior Human resource personnel
as also echoed by other employees.
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Case Study
Erisco Foods Limited
Relationship with Stanbic IBTC
In May 2010, the company requested for working capital
finance which the bank evaluated and approved. The company
utilized the facility to stabilize its operations, and enhance its
liquidity requirements. The Bank was repaid within the tenor
of the loan.
In March 2013, the company approached the bank for
growth finance and working capital due to the heavy capital
outlay involved in acquiring their warehouse, equipment and
machinery, and also to enable them increase their production
lines and introduce the canned tomato products to meet the
latent demand in the market. This was granted by the bank
and ensured the company met up with its 2013 objectives.
Description of business
Our long term commitment to support Nigerian entrepreneurs
to grow and succeed can be described with Erisco Foods
Limited, an indigenous food processing company. Erisco has
been banking with Stanbic IBTC since August 2008 when they
first opened an account with us and experienced our quality
service with our Toyin street branch in Lagos.
The management team of the company led by Chief Eric
Umeofia, has a strong passion for manufacturing and is focused
on steadily growing the business and increasing the company’s
market share of Tomato paste in Nigeria. Accordingly to Chief
Eric Umeofia’s comments about the bank published in Daily
Sun Thursday, October 10, 2013 “Stanbic IBTC Bank saw
our vision and keyed into it’’, “Even when some advised us
to import finished tomato paste from china for them to grant
us funds for trading rather than for manufacturing, we stuck
to our dream, due to our good intentions for our country”.
Business development and future prospects
Erisco Foods Limited was incorporated in 2004 as an
indigenous manufacturer of food products in Nigeria. The
company began operations in 2009, producing one brand
of Tomato Paste in sachet called Nagiko. Soon after they
introduced another brand of tomato paste called Ric-Giko.
They currently have over 10 SKU’s including two brands of
tomato paste in sachet, along with other products like Nagiko
Sugar, Nagiko Monosodium glutamate, Nagiko Basmati Rice
in the market. Erisco Foods Ltd is currently expanding their
product lines by introducing new products to the market.
Company office and outlets
The company’s corporate head office as well as factory
and warehouse are all located at Oregun, Alausa Lagos.
The target market zones of its products include Lagos, Ondo,
Oyo, Kwara, Kano, Sokoto, Kaduna, Ogun and Enugu State.
The Company’s intention is to establish warehouse and
offices in all the states of the federation in order to meet up
with the market demand for their products which is growing
astronomically. The Company’s distribution channels involve
the use of major distributors that buy directly from its factory.
These major distributors resell to smaller distributors who
then sell to the retailers that sell directly to the consumers.
The company plans to have completed the installation of its
tin tomato production line before the end of the first quarter
in 2014. This is expected to add a production capacity of
240,000 tins per day to its existing capacity of 230,000
sachets per day. The expansion will also require the services
of new technicians, engineers, supervisors as well as sales
staff in addition to the 50 staff already employed by the
company and ultimately result in additional employment
of at least 65 staff.
The client is present in other African countries, which presents
additional opportunity to assist its expansion with Standard
Bank’s presence in Africa. In essence the Bank has been able
to support Erisco’s operations through liquidity management,
growth finance and international trade facilitation, three key
pillars of our strategy in supporting local entrepreneurs who
are able to create sustainable value for all stakeholders.
This story inspires us and demonstrates how the right type of
support from a bank can create the platform for sustainable
business growth, and improve society through job creation
and value addition.
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The Corporate and Investment Banking (CIB) business
continues to make great strides in Nigeria’s challenging
and complex economic, capital markets and regulatory
environment in pursuit of its goal of being the clear leader
in corporate and investment banking in, and for, Nigeria. The
diversified skills and expertise of the various units in CIB –
Client Coverage, Global Markets, Transactional Products and
Services and Investment Banking – and our linkages to the
international capabilities of Standard Bank Group, enables us
to deliver to our clients a broad array of services at marketleading levels of quality.
In 2013, greater collaboration across units in CIB and with
the Wealth and PBB businesses within Stanbic IBTC Group
has helped to make the CIB client proposition more robust.
Our CIB client revenue achieved record levels, up nearly
100% from the year before. Increasingly, we are utilizing
our breadth of capabilities more effectively to capitalize on
the opportunities we see in the market. An example of the
collaboration across functions is our retail foreign exchange
business, which drew on capabilities in Global Markets, the
branch network, Business Banking and the public sector, to
achieve year-on-year growth of 211%.
The significant growth in our total client revenue reflects
in part our linkages to Standard Bank’s franchise. Standard
Bank Group’s sustainable competitive advantages are based
on our presence, knowledge and experience across Africa,
our capabilities in key strategic international capital markets,
and the heritage and extent of our expertise in natural
resources. Our strategy is to be the full-service corporate and
investment bank in Nigeria that offers clients the best of local
capabilities and execution, on-the-ground presence in key
African markets, and access to international capital markets to
support African transactions.
CIB’s success in executing its strategy and our strong market
position is exemplified by the industry awards received for our
services and the transactions in which we have been involved:
Best Investment Bank in Nigeria, EMEA Finance Banking
Award, 2013 (for the second year running)
Best Bank in Africa, Euromoney Real Estate Award, 2013
(for the second year running)
The Most Active Dealing Member Firm (Stockbroking) The Nigerian Stock Exchange CEO Award 2013
Best Custodian in Nigeria 2013 by Global Investor for the
seventh year running
Best Sub-Custodian in Nigeria, 2013 - Global Finance
Magazine at SIBOS
Best Foreign Exchange Provider in Nigeria, 2013 - Global
Finance Magazine at SIBOS
M&A Deal of the Year, The Banker awards (2013): for
Tiger Brand’s acquisition of a 63 percent stake in Nigeria’s
Dangote Flour Mills
Structured Finance Deal of the Year, The Banker awards
(2013) for the USD150 million Skye Bank Remittances
Future Flow Securitisation in Nigeria.
Overview of 2013
Transactional Product and Services (TPS)
Transactional Product and Services (TPS) client offerings
include domestic and cross border payments, trade finance,
cash management and custodial services.
In 2013, revenues from both cash management and trade rose
significantly compared to the prior year, driven in particular by
the market share gain in trade and favorable market conditions
with lower interest rates.
With an improved payment platform, TPS offered clients
customized solutions which provided added value in the
area of working capital liquidity and payment terms. Overall,
transactional value and volumes increased notably compared
to 2012. Deposits grew by 8%.
Departmental highlight
Stanbic IBTC Nominees Nigeria Limited
Stanbic IBTC Bank PLC pioneered the custody business in
Nigeria in 1994 to serve foreign investors that are in need
of safekeeping and administration capabilities. Stanbic IBTC
Bank PLC has since emerged as and remained the biggest
custodian in the Nigerian market.
We provide custodial services to both local and international
clients and investors, namely fund managers, asset managers,
global custodians, international broker dealers, stockbrokers,
retirement benefit schemes and other institutional investors
wishing to invest in the Nigerian market.
Stanbic IBTC Bank PLC is one of the six appointed custodians
of money market and fixed income instruments by the CBN.
In August 2012, Stanbic IBTC Bank PLC was also appointed
as one of the two agents to pioneer securities lending in
Nigeria, a significant testament to our thought-leadership
initiatives that are aimed at improving market processes and
the investing climate.
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Corporate and Investment Banking (continued)
In interfacing with clients, we strive to develop a clear
understanding of their service requirements in order to deliver
a total client experience. Our well trained and experienced
operations and relationship teams are supported with robust
infrastructure, which enables us to provide excellent and bestin-class value proposition.
Our strong expertise, market leadership and excellent client
services have resulted in the growth of assets under custody
(AUC) and transaction volumes which have been trending
upward since early 2012.
Global Markets (GM)
The Global Markets unit comprises sales and trading teams
with varying specializations in equities, fixed income, foreign
exchange, money markets and structuring of a wide range
of financial hedging solutions. The research team provides
analysis of markets, products and client activities.
Global Markets performed well in 2013, despite the volatile
market environment seen over the course of the year. In
our Foreign exchange business, trading volumes reached
a record level in 2013, and retail FX revenue increased
significantly with a wider reach to our retail customers. Our
FX desk was ranked best Foreign Exchange Provider in Nigeria
by Global Finance.
In 2013, we continued to be a market leader in structured
products by providing innovative solutions that delivered cost
savings to a wider scope of customers.
Departmental highlight
Stanbic IBTC Stockbrokers Limited (SISL) is the wholly-owned
subsidiary of Stanbic IBTC Holdings PLC. It is registered by the
Securities and Exchange Commission as a broker-dealer and
was licensed on 24 June 1987.
We have consistently been Nigeria’s largest stockbroking firm
in terms of transaction value (2006 to 2013) with a market
share of approximately 19% as at 2013 year end.
SISL has continually demonstrated its expertise in executing
primary market transactions by acting as stockbrokers to
various capital raisings. We also won the Nigerian Stock
Exchange CEO Award for the most active dealing member
firm and InterContinental Finance Magazine’s award for the
Stockbroker of the Year 2013 in Nigeria.
The Debt Management Office re-appointed SISL for another
year (2014) as the only stockbroker to Federal Government
bonds. SISL was also the most active stockbroking firm trading
retail bonds on the floor of The Nigerian Stock Exchange
(NSE) in 2013 and we will continue to promote retail bond
trading on the NSE.
As stockbrokers, we are always willing to place our experience
and expertise in dealing securities of public companies
and bonds quoted on the NSE. We do not only execute
transactions, we build relationships.
Investment banking (IB)
Financial Performance
The key performance indicators are highlighted below:
2013
2012
Nmillion
Nmillion
Growth
%
Total income
41,222
29,830
38
Staff costs
(7,586)
(4,791)
58
(13,258)
(12,473)
6
(323)
(3,329)
(90)
Tax provision
(1,660)
(1,646)
(1)
Profit after tax
18,394
7,591
>100
Deposits
218,454
191,388
14
169,756
174,418
(3)
Provision for risk assets
Investment banking (IB) continues to receive market–
wide acknowledgement of its leading position in Nigeria, as
exemplified by the awards we have received. Our investment
banking team turned in strong performance in growing fee
income. Year-on-year revenue growth was particularly strong
in advisory, real estate, debt capital markets, and mining,
energy and infrastructure.
Some notable transactions during the year included:
Sole Issuing house for La Casera’s N3 billion Corporate
Bond Issue
Joint financial advisor to AMCON’s NGN5.6trn debt
restructuring in 2013
Sole advisor for Danone’s acquisition of a 49% stake in
Fan Milk.
Sole advisor on the merger of Consolidated Breweries, DIL
Maltex, & BBL
Advisor on the merger of Intercontinental Properties
Limited and WAPIC Insurance Plc
Buy side advisor to Southern Sun Africa on the acquisition
of a 75% equity stake in Ikoyi Hotels Limited
Advisory on UAC of Nigeria PLC’s acquisition of Portland
Paints & Products Nigeria PLC
Initial Public Offering for the UPDC REIT
Client Coverage (CC)
Coverage of corporate clients is provided by the Client
Coverage (CC) team which is organized into the following
sectors: Conglomerates and Diversified Industries, Fast
Moving Consumer Goods; Telecom and Commodities; Oil &
Gas, Power & Infrastructure; and Financial Institutions. Client
Revenue grew significantly across all sectors reflecting greater
relevance of our offerings to our clients’ needs.
Strategic direction
Generating value for our clients underpins our strategy and differentiates our franchise. We will continue to develop our
client management capabilities and deliver a consistent CIB client offering and experience which will enable us to maximise
cross-selling opportunities and deliver optimal financial resource utilisation.
Cost efficiency and improving our operational performance are the cornerstones of improvements in our cost structure,
margins and capital ratios.
We will continue to help our clients grow through increased lending to the resource, manufacturing, agriculture and service
sectors, and by raising debt and equity for our clients in the local and international capital markets.
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“Bringing the world to Africa”
Danone and Abraaj’s Acquisition of Fan Milk
Fan Milk is the leading manufacturer and distributor of
frozen dairy products and juices in West Africa. Since its
establishment over 50 years ago, Fan Milk has grown rapidly
through a unique distribution network and currently operates
in Nigeria, Ghana, Togo, Burkina Faso, Benin and Ivory Coast.
The Company generated sales of c. EUR120 million in 2012
and owns strong and deeply entrenched brands in the
countries in which it operates.
In 2013, Stanbic IBTC Capital Limited advised Danone, one
of the largest food product manufacturers in the world,
producing fresh dairy, water and nutritional products
globally, on the acquisition of Fan Milk in partnership with
Abraaj, a leading emerging market focused private equity
group. The partnership with Abraaj combined Danone’s deep
global resources across various functions, including route-tomarket, marketing functions and research and development
capabilities with Abraaj’s understanding of the domestic
environments in which Fan Milk operates.
In 2012, the shareholders of Fan Milk, assisted by advisers,
commenced a process to divest of their interest in the
Company via a competitive auction process that entailed
several financial and trade buyers. Potential bidders were
attracted by Fan Milk’s strong brands, historical financial
performance, geographic diversification, unique distribution
model and strong governance.
Stanbic IBTC assisted Danone in deepening its understanding
of the markets in which Fan Milk operates, conducting due
diligence on the company and outlining a compelling proposal
to Fan Milk’s shareholders. The competitive auction process
culminated with Danone and Abraaj partnering to acquire
Fan Milk.
Advising Danone on the acquisition of Fan Milk represents
Stanbic IBTC’s commitment to assisting global players on
making strategic investments aimed at benefiting from the
significant growth potential in Africa.
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Our Aspiration, Our Commitment…
“Power and Infrastructure Story”
Stanbic IBTC’s commitment to the power sector reform which
will boost the economic and social development of Nigeria is
demonstrated by its focus on financing and advisory solutions
offered during the privatisation of the PHCN successor
generating companies (“Gencos”) and distribution companies
(“Discos”) in 2013.
Stanbic IBTC and Standard Bank Group (SBG) supported Vigeo
Holdings in its acquisition of Benin Disco and Copperbelt
Energy Corporation PLC (CEC) in the acquisition of Abuja
Disco and Shiroro Hydro Genco.
The first stage of the bidding process commenced with each
consortium submitting a bid bond with its complete technical
and commercial bid documents. The technical bid was then
evaluated upon which successful consortiums proceeded to
the commercial bid stage and were required to post a Post
Qualification Security before their commercial bids were
opened. The successful consortium at the commercial bid
stage was declared the preferred bidder and required to post
a Preferred Bidders’ Guarantee equivalent to 15% of the bid
price. The preferred bidder proceeded to negotiate industry
and transaction documents with BPE and was required to pay
25% of the bid price upon execution of agreements, while the
balance 75% was paid within 6 months thereafter.
In August 2013, 15 consortia paid the required 75% final
payments for their respective assets to complete the
acquisition process with USD3 billion accruing to the federal
government from the divestment. Subsequently on November
01, 2013, the 15 PHCN successor companies were handed
over to new owners declaring the emergence of the new
privatized electricity market and making the Nigeria the first
country on the African continent to achieve this milestone.
Vigeo Holdings Ltd
Vigeo Holdings evolved into a conglomerate holding
company with subsidiaries operating in various sectors
including financial services, marketing and distribution,
real estate management since its inception in 1985. Vigeo
Holdings’ business activities in the power sector are carried
out via Vigeo Power Limited (“VPL”) and Global Utilities
Management Company Limited (“GUMCO”). GUMCO had
gained experience of the Nigerian power sector since 2002,
when it participated in the Federal Government’s metering
billing and revenue management program.
Copperbelt Energy Corporation PLC (CEC)
CEC is a market leader in providing power to the mining
industries on the Copperbelt and distributes around 50% of
Zambia’s power. CEC is a 52% subsidiary of Zambia Energy
Corporation Limited. CEC submitted its bid via Kann Utility
Limited (Nigerian incorporated vehicle, in which CEC owns
a majority stake) for the acquisition of Abuja Electricity
Distribution Plc.
Stanbic IBTC and SBG provided all the bonds and guarantees
towards the acquisition bid culminating in the preferred
bidders guarantee upon Kann Utility being named winner of
the bid process for Abuja Disco, and part financed payments
for the assets.
We are committed to the power sector reforms and are excited
about the prospects for the sector going forward. To that end,
Stanbic IBTC and SBG sponsored two investor forums in the
United States in September 2013, which enabled ministers
of the Federal Government to present the power strategy to
groups of US and international investors.
The bank will continue to support the market as the new
owners commence investments into rehabilitation and
expansion of the sector towards the achievement of the goal
of 40,000MWs by the year 2020. We will also work with
other parties to support off-grid and clean energy solutions to
expand the range and capacity of power solutions in Nigeria.
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Wealth
What we offer
The Wealth division focuses primarily on pension administration
and management, private non-pension asset management as
well as trusteeship and estate planning business.
2013 highlights
2014 priorities
Active collaboration with Banks that do not have associated
Trustee Companies.
Launching of the Stanbic IBTC Trustees Limited website
to create more awareness/visibility.
Achieved record assets under management of N1.32
trillion (USD8.18 billion) to maintain position as the largest
institutional investment business and number one wealth
manager in Nigeria with Stanbic IBTC Pension Managers
crossing the N1 trillion mark in assets under management.
Introduction of an online application process for pension
payments via secure web.
Recorded year on year net profit growth of 64%.
Focus on service quality and greater accessibility to clients
by building a culture of service and being customer centric.
Improved cost efficiency by attaining a cost to income
ratio of 35%, a 12% improvement over last year’s
ratio of 47%.
Extension of the pre-retirement seminar for “soon-to-be”
retirees to other regions within the country.
Exploration of online registration as an alternative
to capture the internet savvy subset of prospective
Retirement Savings Account (RSA) holders.
Recorded an impressive return on equity of 57.3%.
Launched the first mobile office in the pension industry –
“Pension on Wheels”.
Creation of an alternative investment desk and the
launching of our first Exchange Traded Fund.
Overview
Conducted successfully the first pre-retirement seminar
to educate our “soon-to-be” retirees.
The Wealth division is one of the arms of Stanbic IBTC Holdings
Plc. This division comprises three companies:
Won our first State Bond mandate as Lead Trustee.
Secured approval from the Securities and Exchange
Commission on the Stanbic IBTC Iman Fund bringing the total
number of Collective Investment Schemes to seven (7).
Awarded the Best Investment Manager Company
in Nigeria in 2013 by World Finance.
Introduced the online self-service channels for
subscription, redemption and password auto-reset
processes for existing mutual fund unit-holders.
Investment in the Stanbic IBTC Nigerian Equity Fund by
the Securities and Exchange Commission on behalf of
winners of the 2013 SEC Integrity Award.
Enhanced visibility and awareness of Stanbic IBTC Trustees
Limited within the industry.
Stanbic IBTC Pension Managers Limited (SIPML) for the
administration and management of pension assets,
Stanbic IBTC Asset Management Limited (SIAML) for the
management of non-pension assets and
Stanbic IBTC Trustees Limited (SITL) for trusteeship and
estate management functions.
The Wealth group as at 31 Dec 2013 had circa N1.32 trillion
as assets under management (AUM) and has remained the
leading wealth manager in Nigeria with SIPML consolidating
its pre-eminent position as the largest PFA in terms of AUM
and number of RSAs, SIAML also maintained its position
as the largest independent non-pension assets manager
measured by value of AUM, number and size of mutual funds
and number of customers with SITL broadening our product
offering by catering to the needs of different strata of our
clientele with respect to estate management and trusteeship.
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Wealth (continued)
Strategy
The wealth business model is primarily focused on assisting our
clients in investing in a variety of eligible asset classes including
fixed income and equities markets to effectively deploy,
accumulate and preserve wealth. However, in doing this, we
are committed to ensuring security, liquidity and reasonable
returns over a medium-long term investment horizon.
Across the Wealth division in 2013, we maintained our
leadership position in the industry by further increasing our
client base and assets under management as well as introducing
new product offerings. For the pension business, we added
over 160,000 clients closing the year with 1.22 million RSA
clients. Assets under management grew by 34% to close at
N1.16 trillion (USD7.19 billion). The first ever mobile pension
office “Pension on Wheels” was launched during the year.
This initiative is in line with our commitment to ensuring that
all our clients experience excellent and convenient service at
all times.
The non-pension asset management business closed its
assets under management at N159 billion (USD987 million)
recording a 27% increase over the 2012 closing figures.
During the year, SIAML maintained a subscriber base of about
35,000 in its mutual funds despite investors’ apathy and other
macro-economic challenges. The Stanbic IBTC Iman Fund was
also launched in the course of the year creating an additional
avenue for investors to diversify their portfolios.
Looking forward
target, benefitting from favourable market indices and wellresearched investment decisions. Revenue grew by 33% and
net profit rose by an impressive 64% over the 2012 figures,
while total assets under management increased by 33% to
close at N1.32 trillion (USD8.18 billion). We were able to
leverage on the strength of our businesses and our premier
positioning in the industries to sustain improvement in
income levels, while keeping operational expenses in check by
improving internal efficiencies.
2013
2012
Nmillion
Nmillion
Growth
%
1,948
1,684
16
16,712
12,368
35
Net interest income
Total income
18,660
14,052
33
Staff cost
(2,899)
(2,477)
17
Other operating cost
(3,502)
(4,104)
(15)
Tax provision
(3,873)
(1,895)
>100
8,386
5,576
50
N1.32 trn
N991 bn
33
1,220,777
1,054,525
16
34%
47%
Profit after tax
Assets under
management
Retirement savings
accounts
The trusteeship and estate management business continued
to thrive in the year and maintained its profitable position. We
focused on entering into the bond market by acquiring State
Bond mandates in 2013. We were appointed as Lead Trustees
to the Nasarawa State Bond Offering which was a first for us.
Financial performance
In 2013, the Wealth Group continued to benefit from the
positive performance of the Nigerian capital market. The
impressive equities market performance could be attributed
to factors such as the rub-off effect of the largely impressive
2012 year end results; impressive valuation of blue chip
consumer names; growing investors’ confidence; and
significant increase in foreign inflow into the market. Yields
on fixed income instruments were lower than last year on
average due to a significant drop in headline inflation levels
and relative price stability; they were however still strong
enough to support positive return on our portfolios.
Despite the negative impact of the policy changes by the
CBN during the year and increased competition from peers,
the Wealth Group was able to surpass its set budgetary
Revenue by business unit
SIAML
14.89%
2014 has the potential to be another positive year for global
equities, though not on the level witnessed in 2013. After
a year in which multiple expansion has been the dominant
factor, we expect that financial markets will gradually
pay more attention to the underlying profitability of the
companies, given the gradual phasing out of the US Fed’s
generous monetary policy. On the fixed income side, 2014 is
a pre-election year in Nigeria and is usually characterized by
higher spending; Federal government spending increased by
nearly 50% YoY before the last election in 2011, enhanced
by supplementary budgets. We expect that there will be
supplementary budgets to support political spending in 2014.
A couple of regulatory changes are expected to take-off
in 2014, including the appointment of a new DirectorGeneral of the National Pension Commission, as well as other
Commissioners. The much awaited multi-fund structure
on the RSA Funds and opening of the transfer window
in the Pension industry are also expected to take off during
the year. While we still expect to face challenges in investment
returns and fee generation, we intend to remain steadfast to
our core values and policies which will guide our decisions
throughout the course of the New Year.
The RSA number and size will be driven by continually
exploring new markets and aiming for a larger share of
existing markets by taking advantage of the transfer window
which we expect will go live in 2014. We also intend to launch
additional mobile offices making our services more accessible
and convenient for our customers. In addition, to capture the
internet savvy subset of the market, we intend to explore
online applications for pension payments as well as online
registration for prospective RSA customers.
To further make our services available and convenient to our
customers, we will enable new subscriptions to the mutual
funds online thereby eliminating the need for physical human
interaction and/or document submission. We will also be
expanding our asset management business by introducing
our first Exchange Traded Fund to enable investors obtain
a broad exposure to the Nigerian Equities Market in a cost
efficient manner.
SITL
0.77%
SIPML
84.34%
We intend to collaborate with key Trust companies in the
industry to get on board state government bonds and other
related transactions. In addition, we will go on an aggressive
mandate acquisition drive by partnering with Banks that
do not have associated Trust Companies.
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Sustainability remains a fundamental part of
our business strategy
At Stanbic IBTC, we understand that sustainable practices
within a business can create value for customers, investors,
and all other key stakeholders. We believe that a sustainable
business must meet customer needs while, at the same
time, take care of the social needs of its host community.
And because our main objective as a business is to create
value for our stakeholders, Sustainability will always remain
a fundamental part of our business strategy.
We proactively embed sustainability thinking and sustainable
business practices at every level of our business. We believe that
our most important contribution to sustainable development
is to operate an effective and profitable bank. By providing
access to credit, savings and other financial products, we
enable individuals to improve their quality of life and enhance
their financial security. By providing finance to large and small
businesses we facilitate economic growth and job creation,
and by financing infrastructure and the development of key
sectors, we assist in resolving global challenges such as energy
and food scarcity, resource depletion and climate change.
The very nature of our business positions us to help our
customers and stakeholders manage social and environmental
challenges and invest for the future, which in turn contributes
to the viability and sustainable growth of local markets and
national economies. The success of our customers, clients and
stakeholders guarantees future business, which underpins
our sustainability.
A journey to sustainable social impact
What does Social Impact mean to our stakeholders? How do
we deliver sustainable social value that will resonate with
the yearnings of our key stakeholders? How can we make
contribution that will satisfy the needs of today and those
of generations to come? These are questions that we ask
ourselves constantly as we strive to create a sustainable
business. Our strategies are constantly evolving and improving
to ensure that the answers to these questions remain
fresh and relevant. Our journey to creating a sustainable
business is deliberately never ending because we are more
interested in the lessons that we pick along the way than
the actual destination.
Corporate social investment: Business Needs
and Societal Needs
As with any strategic endeavour, Our Corporate Social
Investment activities are hinged on three thematic areas
(Health, Education and Economic Empowerment). Socio
economic research has identified these thematic areas as
part of the current most pressing needs of our business
environment. Focus helps us align our investments so that we
can make considerable impact in any of these thematic areas.
It has also helped us define frameworks for engagement. We
try to balance CSI investments between business interests
and the needs of our host community.
We work in partnership with the communities in which we
operate and prioritize communities in which we want to do
business. We employ a research-based approach to understand
the deeper socio-economic needs of these communities by
engaging with government, other businesses and community
organisations. Through merging business and CSI goals, we
aim to create meaningful and lasting mutual benefit.
Creating thriving partnerships
At Stanbic IBTC, monitoring and evaluation of projects is
a routine business practice. We ensure that every step in
the project lifecycle is completed and proper evaluation of
project is carried out at the end of each project. This is part
of the data that feeds the engine that drives our “continuous
improvement journey”.
We have a pre-defined framework for engagement. The
framework differs from project to project and is reviewed
periodically. Our major CSI objectives are; supporting
strategic and credible projects that are aligned with business
objectives, deploying solutions that can be scaled, reaching a
large pool of beneficiaries and being able to leverage business
opportunities as they arise.
Social partners in Nigeria 2013
Category
Major social partners
Education
Federal University of Technology, Ado Ekiti
Zuru Community
Ekiti State Government (SUBEB)
UNIBEN
Depot Nigerian Army
Ministry of Education (Kaduna)
Yaba College of Technology
Ministry of Education (Maiduguri)
Lagos Progressive School
Music Society of Nigeria
Junior Achievement
Ministry of Education (Yobe)
Federal Ministry of Finance (YOUWIN)
Enterprise Development
Nigerian Bar Association
South African Consulate
Health and Wellness
Free optometry services with the Ogun State Government (Oriade LGA)
Modupe Cole Child Care
Hyssop Foundation
International Womens Organisation for Charity
Employee Community Involvement
School Library Project by the Finance department
Breakdown of CSI Spend 2013
Economic
empowerment
7%
Health
9%
Education
85%
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Overview
Risk management framework
The group’s strong enterprise risk management practice is the
bedrock of its commitment to continually enhance shareholders’
value in strict adherence to the risk appetite as set by the board
whilst considering the wider interest of other stakeholders
amongst who are depositors and regulators.
Introduction of point of weakness scenarios;
Approach and structure
Governance structure
Implementation of a market-oriented FTP methodology
which has resulted in attracting the right amount of
liability;
The tone for a responsive and accountable risk management
culture is set at the board level and this flows down through
the organisation to each business manager and independent
risk officer.
Risks are managed according to set risk governance standards,
which are implemented across the group and are supported
by appropriate risk policies and procedures. The bank and
other subsidiaries within the group have each adopted the
Enterprise Risk Management (ERM) framework with an
independent control process that provides an objective view
of risk taking activities across all business and risk types at
both an individual and aggregated portfolio level.
The group seeks to achieve the right balance between risk
and reward in its businesses, and limits adverse variations in
earnings by appropriately managing its capital within specified
risk appetite levels.
Creation of an endowment hedge portfolio for managing
the Interest Rate Risk of Banking Book (IRRBB); and
The group’s approach to risk management is based on well
established governance processes that rely on both individual
responsibility and collective oversight that is supported
by a robust MIS. This approach balances strong corporate
oversight at senior management level with independent risk
management structures in the business. Business unit heads
are known as the first line of defense and are specifically
responsible for the management of risk within their business
using appropriate risk management frameworks that are
adequate in design, effective in operation and that meet the
required group minimum standards.
The risk governance structure provides the board and
executive/senior management through the various
committees, with the platforms to evaluate and debate key
risks faced by the group and assess the effectiveness of risk
responses through the risk profiles received from the chief
risk officers across the group (please refer to the pictorial
representation of the group risk governance structure below).
Key achievements in 2013
Quantitative Risk Management (QRM) software
implementation to replace IPS Sendero for ALM
monitoring.
Compliance
Roll out of the Anti Money Laundering (AML) / Countering
Financing of Terrorism (CFT) computer based training for
all employees of the group;
Focus areas for 2014
Against a backdrop of an expected increase in the level of
financial transactions on the electronic payment platform with
the attendant rise in cyber fraud, the roll-out of Basel II and III
by the CBN, and other macroeconomic factors like the
expected increase in Direct Foreign Investments, a few of the
risk focus areas for 2014 are:
Amidst randomly unfolding new regulatory guidelines and
frameworks, the group was able to distinguish itself in the
industry by the quality and robustness of its risk management
practices and tools. Some specific achievements include:
Deployment of an Enterprise-wide fraud management
solution;
Operational Risk
Deployment of a new AML solution that would be used for
the detection, identification and reporting of suspicious
transactions;
Business continuity management simulation for crisis
management and emergency evacuation teams; and
Consolidation of New Product Approval process across the
group.
An important element that underpins the group’s approach to
the management of all risk is independence and appropriate
segregation of responsibilities between business and risk. Risk
officers report separately to the head of group risk who reports
to the chief executive officer of Stanbic IBTC and also through a
matrix reporting line to the Standard Bank Group (SBG).
All key risks are supported by the risk department.
Governance structure
Stanbic IBTC Holdings PLC Board
Nominations
Committee
Partial introduction
Report (MRR);
of
automated
Market
Implementation of a local Basel II/III framework in line
with the CBN guidelines;
IT Steering Committee
(Programme of Works)
Full implementation of MRR for automated reporting and
limit monitoring across all market risk metrics;
Operational Risk and
Compliance Committee
Development of a methodology to deal with stale trading
inventory;
Set-up of a Middle Office that will oversee the operations
of non-standard lending transaction; and
Risk Management
Committee
Executive
Committee
Risk
Upgrade of Trading/Risk system from Calypso version 9
to version 13;
Renumeration
Committee (REMCO)
Enhancement of the group’s IT disaster recovery
infrastructure;
Market Risk
Diversified Normal and Stress VaR reporting across all
trading desks with the implementation of Historical 10
day Stress VaR;
The board committees comprise the statutory audit committee,
board credit committee and board risk management
committee, while executive management oversight at the
subsidiary and group levels are achieved through management
committees that focus on specific risks. Each of the board and
management committees is governed by mandates that set
out the expected committee terms of reference.
Board Committees
Career Management
Committee
Shared Service
Operations EXCO
New Products
Committee
Wealth
EXCO
Statutory Committee
Set-up of the Risk Oversight Committee (ROC) that would
be responsible for the oversight in respect of all risk types
and facilitate risk independence from the business.
Management Committee
Shareholders
Audit
Committee
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Risk governance standards, policies and procedure
The group has developed a set of risk governance standards for
each major risk type i.e. credit, market and operational risks.
The standards define the acceptable conditions for the
assumption of the major risks and ensure alignment and
consistency in the manner in which these risks are identified,
measured, managed, controlled and reported, across the group.
All standards are applied consistently across the group and are
approved by the board. It is the responsibility of the business
unit executive management to ensure that the requirements
of the risk governance standards, policies and procedures are
implemented within the business units.
Each standard is supported by policies and procedural
documents.
Residual risk is then evaluated against the risk appetite.
The group’s enterprise risk management framework is
designed to govern, identify, measure, manage, control and
report on the principal risks to which the group is exposed.
The principal risks are defined as follows:
Concentration risk refers to any single exposure or group of
exposures large enough to cause credit losses which threaten
the group’s capital adequacy or ability to maintain its core
operations. It is the risk that common factors within a risk
type or across risk types cause credit losses or an event occurs
within a risk type which results to credit losses.
Credit risk
Market risk
Credit risk arises primarily in the group operations where an
obligor/counterparty fails to perform in accordance with
agreed terms or where the counterparty’s ability to meet such
contractual obligation is impaired.
Market risk is defined as the risk of a change in the actual
or effective market value or earnings of a portfolio of
financial instruments caused by adverse moves in market
variables such as equity, bond and commodity prices,
foreign exchange rates, interest rates, credit spreads,
recovery rates, correlations and implied volatilities in the
market variables. Market risk covers both the impact of
these risk factors on the market value of traded instruments
as well as the impact on the group’s net interest margin as
a consequence of interest rate risk on banking book assets
and liabilities.
Risk categories
Credit risk comprises counterparty risk, settlement risk,
country risk and concentration risk.
Risk appetite
Risk appetite is an expression of the maximum level of residual
risk that the group is prepared to accept in order to deliver its
business objectives. It is the balance of return and risk as the
group implements business plans, whilst recognising a range
of possible outcomes.
Risk appetite is expressed by balancing:
budgetary provisions for expected losses that are consistent
with the risk appetite implied by the business plans;
Counterparty risk
Counterparty risk is the risk of loss to the group as a result of
failure by a counterparty to meet its financial and/or
contractual obligations to the group. It has three components:
i. primary credit risk which is the exposure at default (EAD)
arising from lending and related banking product activities,
including their underwriting;
the risk adjusted returns generated from risk-taking
activities; and
ii. pre-settlement credit risk which is the EAD arising from
unsettled forward and derivative transactions, arising from
the default of the counterparty to the transaction and
measured as the cost of replacing the transaction at current
market rates; and
the absolute constraints on financial resources under
stressed conditions.
iii. issuer risk which is the EAD arising from traded credit and
equity products, and including their underwriting.
an agreed tolerance for profit and loss volatility;
The board establishes the group’s parameters for risk appetite by:
providing strategic leadership and guidance;
reviewing and approving annual budgets and forecasts for
the group and each subsidiary; and
regularly reviewing and monitoring the
performance in relation to set risk appetite.
group’s
Stress testing
Stress testing serves as a diagnostic and forward looking tool
to improve the group’s understanding of its credit; market
and operational risks profile under event based scenarios.
Management reviews the outcome of stress tests and selects
appropriate mitigating actions to minimise and manage the
impact of the risks to the group.
Concentration risk
Settlement risk
Settlement risk is the risk of loss to the group from a
transaction settlement, where value is exchanged, failing such
that the counter value is not received in whole or part.
Country and cross border risk
Country and cross border risk is the risk of loss arising
from political or economical conditions or events in a
particular country which reduce the ability of counterparties
in that particular country to fulfill their obligations to
the group.
Cross border risks is the risk of restriction on the transfer and
convertibility of local currency funds, into foreign currency
funds thereby limiting payment by offshore counterparties to
the group.
Liquidity risk
Liquidity risk is defined as the risk that the group, although
balance-sheet solvent, cannot maintain or generate sufficient
cash resources to meet its payment obligations in full as they
fall due (as a result of funding liquidity risk), or can only do
so at materially disadvantageous terms (as a result of market
liquidity risk).
Funding liquidity risk refers to the risk that the counterparties,
who provide the group with funding, will withdraw or not rollover that funding.
Market liquidity risk refers to the risk of a generalised
disruption in asset markets that makes normal liquid assets
illiquid and the potential loss through the forced-sale of assets
resulting in proceeds being below their fair market value.
Operational risk
Operational risk is defined as the risk of loss resulting from
inadequate or failed processes, people and systems (including
information technology and infrastructure) or from external
events.
environmental risk – the risk of inadvertently participating
in the destruction of the environment;
legal risk – the risk that the group will be exposed to
litigation;
taxation risk – the risk that the group will incur a financial
loss due to incorrect interpretation and application of
taxation legislation or due to the impact of new taxation
legislation on existing business;
compliance risk – the risk that the group does not comply
with applicable laws and regulations or supervisory
requirements.
Business risk
Business risk is the risk of loss due to adverse local and global
operating conditions such as decrease in demand, increased
competition, increased cost, or by entity specific causes
such as inefficient cost structures, poor choice of strategy,
reputation damage or the decision to absorb costs or losses to
preserve reputation.
Credit risk
Principal credit standard and policies
The Standard Bank Group’s Credit Risk Governance Standard,
as reviewed regularly, sets out the broad overall principles
to be applied in credit risk decisions and sets out the overall
framework for the consistent and unified governance,
identification, measurement, management and reporting of
credit risk in the group.
The Corporate and Investment Banking (CIB) and the Personal
and Business Banking (PBB) Global Credit Policies have
been designed to expand the Group Credit Risk Governance
Standard requirements by embodying the core principles
for identifying, measuring, approving, and managing credit
risk. These policies provide a comprehensive framework
within which all credit risk emanating from the operations
of the bank are legally executed, properly monitored and
controlled in order to minimize the risk of financial loss; and
assure consistency of approach in the treatment of regulatory
compliance requirements.
The definition of operational risk also includes:
information risk – the risk of unauthorised use, modification
or disclosure of information resources;
fraud risk – the risk of losses resulting from fraudulent
activities;
In addition to the Credit Risk Governance Standard, CIB and
PBB Global Credit Policies, a number of related credit policies
and documents have been developed, with contents that are
relevant to the full implementation and understanding of the
credit policies.
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Methodology for risk rating
Internal counterparty ratings and default estimates that are
updated and enhanced from time-to-time play an essential role in
the credit risk management and decision-making process, credit
approvals, internal capital allocation, and corporate governance
functions. Ratings are used for the following purposes:
Credit assessment and evaluation
Credit monitoring
Credit approval and delegated authority
Economic capital calculation, portfolio and management
reporting
Regulatory capital calculation
RARORC (Risk-Adjusted Return on Regulatory Capital)
calculation
Pricing: PDs, EADs, and LGDs may be used to assess and
compare relative pricing of assets/facilities, in conjunction
with strategic, relationship, market practice and
competitive factors
The starting point of all credit risk assessment and evaluation
lies in the counterparty risk grading, which is quantified and
calculated in compliance with the group’s credit rating policy
and using such Basel-2 compliant models as are in current use
and which are updated or enhanced from time to time.
Credit risk quantification for any exposure or portfolio is
summarised by the calculation of the expected loss (EL),
which is arrived at in the following way:
based on the risk grading foundation which yields the
counterparty’s probability of default (PD), the nature and
quantum of the credit facilities are considered; a forward-looking quantification of the exposure at
default (EAD) is determined in accordance with group
standard guidelines;
risk mitigants such as security and asset recovery
propensities are then quantified to moderate exposure at
default to yield the loss given default (LGD); and
finally, the EL is a function of the PD, the LGD and the EAD.
These parameters are in turn used in quantifying the required
regulatory capital reserving, using the Regulatory Capital
Calculator developed, maintained and updated in terms of
Basel 2, and the economic capital implications through the use
of Credit Portfolio Management’s (CPM’s) Economic Capital
tools. Furthermore, bearing in mind the quantum of the facility
and the risk/reward thereof, an appropriate consideration
of Basel 2 capital requirements (where applicable) and the
revenue and return implications of the credit proposal.
recommending the group’s credit policies and guidelines
for board approval; and
any other matters relating to credit as may be delegated
to the committee by the board.
Framework and governance
Credit committee
Credit risk remains a key component of financial risks faced by
any bank given the very nature of its business. The importance
of credit risk management cannot be over emphasised as
consequences can be severe when neglected. The bank
has established sound governance principles to ensure that
credit risk is managed effectively within a comprehensive risk
management and control framework.
The credit committee (CC) is the senior management
credit decision-making function of the bank with a defined
delegated authority (DA) as determined by the board through
the board credit committee from time to time.
In reaching credit decisions and taking credit risk, both the
credit and business functions must consistently and responsibly
balance risk and return, as return is not the sole prerogative
of business neither is credit risk the sole prerogative of credit.
Credit (and the other risk functions, as applicable) and business
must work in partnership to understand the risk and apply
appropriate risk pricing, with the overall aim of optimising the
bank’s risk adjusted performance.
The credit committee exercises responsibility for the
independent assessment, approval, review and monitoring
of all credit risk assets relating to the bank’s business, while
ensuring that the origination and management of the assets
comply with the principles documented in the credit risk
governance standard.
In addition to the above, the CC ensures that the credit
portfolio is maintained within the risk appetite set by the
board credit committee.
Credit risk management committee
The reporting lines, responsibilities and authority for managing
credit risk in the bank are very clear and independent.
However, ultimate responsibility for credit risk rests with the
board and which has delegated this to the following organs:
The credit risk management committee (CRMC) is the
senior management credit oversight function with a defined
oversight role as determined by the board through the board
credit committee from time to time.
Board credit committee
The purpose of the board credit committee is to ensure that
effective credit governance is in place in order to provide for
the adequate management, measurement, monitoring and
control of credit risk including country risk. In addition to its
pre-existing role, the committee has also been vested with
the following responsibilities as may be set by the board:
setting overall risk appetite;
reviewing and approving credit facilities that are within
monetary amounts as approved by the board;
ensuring committees within the structure operate
according to defined mandates and delegated authorities;
maintaining overall accountability and authority for the
adequacy and appropriateness of all aspects of the group
credit risk management process;
utilising appropriate tools to measure, monitor and control
credit risk in line with the SBG policies whilst taking into
account local circumstances;
The CRMC effectively enhances credit discipline within the
bank and is responsible for controlling, inter alia, delegated
authorities, concentration risk, distressed debt and regulatory
issues pertaining to credit, credit audits, policy and
governance.
In addition to the above, the CRMC provides oversight of
governance; recommends to the board credit committee the
level of the bank’s risk appetite; monitors model performance,
development and validation; determine counterparty and
portfolio risk limits and approval, country, industry, market,
product, customer segment and maturity concentration risk,
risk mitigation; ,mpairments and risk usage.
Heads of CIB and PBB credit
The heads of CIB credit and PBB credit ensure granularity and
function-specific details at the business unit levels. They have
functional responsibility for credit risk management across
the group and are positioned at sufficiently senior levels in
order to ensure the necessary experience and independence
of judgment.
They are responsible for providing an independent and
objective check on credit risk taking activities to safeguard
the integrity of the entire credit risk process.
Credit risk mitigation
Credit risk mitigation is defined as all methods of reducing
credit expected loss whether by means of reduction of
EAD (e.g. netting), risk transfer (e.g. guarantees) or risk
transformation.
Guarantees, collateral and the transaction structures are
used by the group to mitigate credit risks both identified
and inherent though the amount and type of credit risk is
determined on a case by case basis. The group’s credit policy
and guidelines are used in a consistent manner while security is
valued appropriately and reviewed regularly for enforceability
and to meet changing business needs.
The credit risk mitigation policy establishes and defines the
principles of risk transfer, transformation and reduction.
Processes and procedures for accepting, verifying,
maintaining, and releasing collateral are well documented
in order to ensure appropriate application of the collateral
management techniques.
Credit delegated authority
In terms of specific delegated authority (DA) levels approved
(and updated from time to time) by the board upon advise,
authority for approval of any credit facilities accorded to
counterparties is vested in individuals, and/or groups of
individuals acting in concert, and/or credit committees.
Such DA levels are quantified according to counterparty risk
grade. Individuals may be accorded DA levels on the authority
of the parties specifically mandated to do so in terms of the
credit governance framework.
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Group’s rating
Global and Africa Credit
Committee / Board Credit
Committee
Management Credit
Committee
Country Credit Head /
Head of CIB Credit
Maximum approval limit (N’m)
Corporate and investment banking
SB01 – SB10
Up to legal lending limit
Up to Legal Lending Limit
SB11 – SB12
11,200
SB13
8,000
SB14 – SB15
4,800
SB16 – SB18
12,800
4,000
SB19 – SB20
6,400
1,600
SB21
4,800
1,600
SB22 – SB23
4,800
800
SB24 – SB25
4,800
600
2,400
1,200
Personal and business banking
SB01 – SB25
The global credit committee approves based on the mandate
given to them by the board credit committee. All approvals are
sanctioned by the board credit committee. The board credit
committee approves all insider-related credit irrespective of
the amount.
Credit risk measurement
A key element in the measurement of credit risk is the
assignment of credit ratings, which are used to determine
expected defaults across asset portfolios and risk bands.
The risk ratings attributed to counterparties are based on a
combination of factors which cover business and financial risks:
The group uses the PD Master Scale rating concept with a
single scale to measure the credit riskiness of all counterparty
types. The grading system is a 25-point scale, with three
additional default grades.
Group’s rating
Grade
description
External
rating
SB01 – SB12/SB13 Investment grades
AAA to BBB-
SB13 – SB25
BB- to CCC
Speculative grades
Non-performing loans are those loans for which:
the group has identified objective evidence of default,
such as a breach of a material loan covenant or condition;
or
instalments are due and unpaid for 90 days or more.
Non-performing but not specifically impaired loans are
Doubtful items that are not yet considered final losses due
not specifically impaired due to the expected recoverability to some pending factors that may strengthen the quality
of the full carrying value when considering future cash flows, of the items; and
including collateral.
Loss items that are considered to be uncollectible in whole
or in part. The group provides fully for its anticipated loss,
after taking collateral into account.
Loans structure
Loans
IFRS 7: - Financial Instument Disclosure
The tables that follow analyse the credit quality of loans and
advances measured in terms of IFRS.
Maximum exposure to credit risk
Loans and advances are analysed and categorised based on
credit quality using the following definitions.
Performing loans
Neither past due nor specifically impaired loans are loans that
are current and fully compliant with all contractual terms and
conditions.
Early arrears but not specifically impaired loans include those
loans where the counterparty has failed to make contractual
payments and payments are less than 90 days past due, but it
is expected that the full carrying value will be recovered when
considering future cash flows, including collateral. Ultimate
loss is not expected but could occur if the adverse conditions
persist.
Non-performing specifically impaired loans are those
loans that are regarded as non-performing and for which
there has been a measurable decrease in estimated future
cash flows. Specifically impaired loans are further analysed
into the following categories:
Substandard items that show underlying well-defined
weaknesses and are considered to be specifically
impaired;
Performing loans
Neither past
due nor
specifically
impaired loans
Current
Portfolio credit impairments
Specific credit impairments
Early arrears
but not
specifically
impaired loans
Close
monitoring
Non-performing
but not
specifically
impaired loans
Specifically
impaired
loans
Substandard
Doubtful
Loss
96
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Maximum exposure to credit risk by credit quality
December 2013
Performing loans
Neither past due nor
specifically impaired
Banking
Mortgage loans
Instalment sale and finance leases
Card debtors
Not specifically
impaired
Specifically impaired loans
Net after
securities
and
expected Balance sheet
recoveries
impairments
on
for nonspecifically
performing
impaired
specifically
loans impaired loans
Nmillion
Nmillion
Total loans
and Advances
to Customers
Nmillion
Balance sheet
impairments
for
performing
loans
Nmillion
Normal
monitoring
Nmillion
Close
monitoring
Nmillion
Early
arrears
Nmillion
Nonperforming1
Nmillion
Substandard
Nmillion
Doubtful
Nmillion
Loss
Total
Nmillion
Nmillion
Securities
and
expected
recoveries
on
specifically
impaired
loans
Nmillion
133,550
1,729
87,000
6,852
29,703
-
3,730
3,027
3,238
9,995
3,116
6,879
8,667
68
6,709
-
1,539
-
86
60
272
418
111
18,084
447
7,446
2246
6,198
-
545
1,383
267
2,195
850
3
587
-
186
-
21
55
-
76
Gross
specific
impairment
coverage
%
Total nonperforming
loans
Nmillion
Nonperforming
loans
%
6,879
69
9,995
7.5
307
307
73
418
4.8
839
1,356
1,356
62
2,195
12.1
7
69
69
91
76
8.9
Other loans and advances
105,949
1,211
72,258
4606
21,780
-
3,078
1,529
2,699
7,306
2,159
5,147
5,147
70
7,306
6.9
169,756
2,858
150,563
15,781
-
-
1,051
293
2,068
3,412
1,318
2,094
2,094
61
3,412
2.0
Corporate loans
169,756
2,858
150,563
15,781
-
-
1,051
293
2,068
3,412
1,318
2,094
2,094
61
3,412
2.0
303,306
4,587
237,563
22,633
29,703
-
4,781
3,320
5,306
13,407
4,434
8,973
8,973
67
13,407
4.4
Less:
Impairment for loans and
advances
(13,559)
Net loans and advances
289,747
Exposures:
Cash and cash equivalents
Derivatives
120,312
1,526
139,304
94,180
Trading assets
40,711
Pledged assets
24,733
Other financial assets
10,346
Total on-balance sheet
exposure
720,859
Unrecognised financial assets:
Letters of credit
20,836
Guarantees
23,779
Total exposure to credit risk
1
765,474
Includes loans of N0m that are past due but are not specifically impaired.
Additional disclosures on loans and advances is set out in note 11.
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December 2012
Performing loans
Neither past due nor
specifically impaired
Balance sheet
Total loans
impairments
and Advances for performing
to Customers
loans
Nmillion
Nmillion
Not specifically impaired
Specifically impaired loans
Securities
and
Net after
expected securities and
recoveries
expected
on recoveries on
specifically
specifically
impaired
impaired
loans
loans
Nmillion
Nmillion
Balance sheet
impairments
for nonperforming Gross specific
impairment
specifically
coverage
impaired loans
Nmillion
%
Normal
monitoring
Nmillion
Close
monitoring
Nmillion
Early
arrears
Nmillion
Nonperforming1
Nmillion
Substandard
Nmillion
Doubtful
Nmillion
Loss
Total
Nmillion
Nmillion
75,216
-
21,173
-
3,366
2,333
2,966
8,665
3,104
5,561
5,561
Total nonperforming
loans
Nmillion
Nonperforming
loans
%
64
8,665
8.2
105,055
1,983
Mortgage loans
10,571
190
6,669
-
2,851
-
288
374
389
1,051
321
732
732
70
1,051
10.0
17,080
618
11,823
-
4,128
-
56
368
705
1,129
350
778
778
69
1,129
6.6
494
18
423
-
44
-
10
-
17
27
1
26
26
97
27
5.5
Overdrafts
13,037
110
11,886
-
532
-
183
1
435
619
108
511
511
83
619
4.8
Unsecured Personal Loans
34,154
273
25,244
-
7,836
-
353
297
424
1,074
184
889
889
83
1,074
3.1
Business Term Loans
29,719
774
19,171
-
5,782
-
2,476
1,293
996
4,765
2,140
2,625
2,625
55
4,765
16.0
174,418
1,859
168,744
-
-
-
176
3,098
2,401
5,675
1,948
3,726
3,726
66
5,675
3.3
Corporate loans
174,418
1,859
168,744
-
-
-
176
3,098
2,401
5,675
1,948
3,726
3,726
66
5,675
3.3
Card debtors
Central and Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
279,473
3,842
243,960
-
21,173
-
3,542
5,431
5,367
14,340
5,052
9,287
9,287
65
14,340
5.1
Less:
Impairment for loans and
advances
(13,129)
266,344
Add the following other banking
activities exposures:
Derivatives
106,680
1,709
85,757
24,571
Trading assets
114,877
Pledged assets
24,440
13,340
Total on-balance sheet exposure
637,718
Unrecognised financial assets:
Letters of credit
19,145
Guarantees
25,672
Total exposure to credit risk
1
682,535
Includes loans of N0m that are past due but are not specifically impaired.
Additional disclosures on loans and advances is set out in note 11.
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Ageing of loans and advances past due but not specifically impaired
Less than
31 days
Nmillion
31-60
days
Nmillion
Collateral
61-90
days
Nmillion
91-180
days
Nmillion
More than
180 days
Nmillion
Total
Nmillion
December 2013
Total collateral coverage
Note
Total
exposure
Nmillion
Unsecured
Nmillion
Secured
Nmillion
Netting
agreements
Nmillion
Secured
exposure
after
netting
Nmillion
1%-50%
Nmillion
Greater
than
50%100%
100%
Nmillion Nmillion
25,256
3,164
1,283
-
-
29,703
Mortgage loans
1,109
285
146
-
-
1,540
Corporate
218,902
65,139
153,763
-
-
83,124
36,451
34,188
Instalment sales and finance lease
4,654
1,267
276
-
-
6,197
Sovereign
200,868
200,868
-
-
-
-
-
-
128
36
22
-
-
186
Bank
204,442
204,442
-
-
-
-
-
-
19,365
1,576
839
-
-
21,780
Retail
138,348
58,246
80,102
-
-
13,465
21,245
45,392
-
-
-
-
-
-
Retail mortgage
8,667
-
8,667
-
-
124
993
7,549
-
-
-
-
-
-
Other retail
129,681
58,246
71,435
-
-
13,341
20,252
37,843
25,256
3,164
1,283
-
-
29,703
Total
762,560
528,695
233,865
-
-
96,589
57,696
79,580
14,823
4,857
1,493
-
-
21,173
Mortgage loans
1,864
743
243
-
-
2,850
Add: Financial assets not
exposed to
credit risk
Instalment sales and finance lease
2,410
1,485
233
-
-
4,128
Card debtors
Corporate loans
Total
December 2012
Card debtors
Corporate loans
Total
-
31
13
-
-
44
10,549
2,598
1,004
-
-
14,151
-
-
-
-
-
-
-
-
-
-
-
-
14,823
4,857
1,493
-
-
21,173
December 2013
Less: Impairments for
loans and advances
(13,559)
Less: Unrecognised off
balance sheet items
(44,615)
Total exposure
720,866
Reconciliation to balance
sheet:
Cash and cash
equivalents
Renegotiated loans and advances
Collateral includes:
Renegotiated loans and advances are exposures which have
been refinanced, rescheduled, rolled over or otherwise modified
due to weaknesses in the counterparty’s financial position, and
where it has been judged that normal repayment will likely
continue after the restructure. Renegotiated loans that would
otherwise be past due or impaired comprised N1.871 billion as
at 31 December 2013 (Dec 2012: N2.869 billion). financial securities that have a tradable market, such as
shares and other securities;
Collateral
The table that follows shows the financial effect that collateral
has on the group’s maximum exposure to credit risk. The table
is presented according to Basel II asset categories and includes
collateral that may not be eligible for recognition under Basel II
but that management takes into consideration in the
management of the group’s exposures to credit risk. All on- and
off-balance sheet exposures which are exposed to credit risk,
including non-performing assets, have been included.
physical items, such as property, plant and equipment; and
financial guarantees, suretyships and intangible assets.
All exposures are presented before the effect of any impairment
provisions.
In the retail portfolio, 58% (Dec 2012: 39%) is fully
collateralised. Of the group’s total exposure, 69% (Dec
2012: 74%) is unsecured and mainly reflects exposures to
well-rated corporate counterparties, bank counterparties and
sovereign entities.
16,480
7
120,312
Derivatives
10
1,526
11
139,304
Loans and advances
12
383,927
Trading assets
9
40,711
Pledged assets
8
24,733
Total
10,346
720,859
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Collateral
Total collateral coverage
Total
exposure
Nmillion
Unsecured
Nmillion
Secured
Nmillion
Netting
agreements
Nmillion
Secured
exposure
after
netting
Nmillion
Corporate
226,711
97,354
129,357
-
-
55,475
73,426
456
Sovereign
191,033
191,033
-
-
-
-
-
-
Bank
152,513
152,513
-
-
-
-
-
-
Retail
109,871
66,742
43,129
-
-
6,756
34,150
2,223
Retail mortgage
11,400
-
11,400
-
-
-
11,400
-
Other retail
98,471
66,742
31,729
-
-
6,756
22,750
2,223
680,128
507,642
172,486
-
-
62,231
107,576
2,679
Note
1%-50%
Nmillion
50%100%
Nmillion
Greater
than
100%
Nmillion
December 2012
Total
Add: Financial assets not
exposed to
credit risk
Credit provisioning based on prudential guidelines
In accordance with the Prudential Guidelines issued by the Central Bank of Nigeria, provision against credit risk is as follows;
Non performing accounts
Interest and/or principal outstanding for over:
Classification
Minimum provision
90 days but less than 180 days
Substandard
10%
180 days but less than 360 days
Doubtful
50%
Over 360 days
Lost
100%
When a loan is deemed uncollectible, it is written off against the related provision for impairments. Subsequent recoveries are
credited to the provision for loan losses in the profit and loss account. If the amount of the impairment subsequently decreases
due to an event occurring after the write-down, the release of the provision is credited as a reduction of the provision for
impairment in the profit and loss account.
Performing accounts
15,536
Less: Impairments for
loans and advances
(13,129)
Less: Unrecognised off
balance sheet items
(44,817)
Total exposure
637,718
A minimum of 1% general provision on performing loans is made in accordance with the prudential guidelines.
Prudential guidelines disclosures
Had the Prudential Guidelines been employed in the preparation of these financial statements, the impairments for loans and
advances to customers as well as related disclosures, would have been made as follows:
Group
Reconciliation to
balance sheet:
Cash and cash
equivalents
7
106,680
Derivatives
10
1,709
11
85,757
Loans and advances
12
290,915
Trading assets
9
114,877
Pledged assets
8
24,440
Total
13,340
637,718
31 Dec 2013
Nmillion
31 Dec 2012
Nmillion
306,306
281,080
-
1,607
303,306
279,473
8,667
10,571
27,012
29,972
850
494
32,676
29,193
Other term loans
234,101
209,243
Credit impairments for loans and advances
(14,329)
(13,949)
(11,420)
(9,691)
-
(1,607)
(2,909)
(2,651)
288,977
267,131
Prudential disclosure of loan and advances
to customer
Gross loans and advances to customers
Accrued interest on impaired loans
Customer exposure for loans and advances
Mortgage loans
Card debtors
Overdrafts and other demand loans
Interest in suspense
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Liquidity risk
The nature of banking and trading activities results in a
continuous exposure to liquidity risk. Liquidity problems can
have an adverse impact on a group’s earnings and capital and,
in extreme circumstances, may even lead to the collapse of a
group which is otherwise solvent. The group's liquidity risk management framework is designed
to measure and manage the liquidity position at various levels
of consolidation such that payment obligations can be met
at all times, under both normal and considerably stressed
conditions. Under the delegated authority of the board of
directors, ALCO sets liquidity risk policies in accordance with
regulatory requirements and international best practice. Limits and guidelines are prudently set and reflect the group's
conservative appetite for liquidity risk. ALCO is charged with
ensuring compliance with liquidity risk standards and policies.
processes and procedures, independent oversight and regular
independent reviews and evaluations of the effectiveness of
the system.
Structural liquidity mismatch management
The mismatch approach measures a group’s liquidity by
assessing the mismatch between its inflow and outflow of funds
within different time bands on a maturity ladder. The structural
liquidity mismatch is based on behaviourally-adjusted cash flows
which factors a probability of maturity into the various time
bands. Detailed assumptions and reasoning applied in compiling
the structural liquidity mismatch are well documented.
In the main, readily available liquidity is profiled based
on realistic liquidation periods (including appropriate
forced-sale discounts), while other cash flows with a
predetermined runoff are profiled according to their
remaining contractual maturity;
Ambiguous maturity loan and advance products are
profiled using an attrition analysis;
Liquidity and funding management
A sound and robust liquidity process is required to measure,
monitor and manage liquidity exposures. The group has
incorporated the following liquidity principles as part of a
cohesive liquidity management process:
structural liquidity mismatch management;
long-term funding ratio;
Ambiguous maturity deposit and borrowing products are
profiled using a volatility analysis, except where such
products do not exhibit term behaviour, in which case they
are profiled in the sight-to-7 day maturity bucket;
Where material, off-balance sheet facilities granted by the
group must be profiled on the basis of probable drawdown;
all other cash flow items or positions in respect of which
no right or obligation in respect of maturity exists must be
profiled in the >12-months maturity bucket.
back-testing;
maintaining minimum levels of liquid and marketable
securities;
depositor concentration;
local currency loan to deposit limit;
foreign currency loan to deposit limit;
All other cash flow items or positions in respect of which
no right or obligation in respect of maturity exists must be
profiled in the >12-months maturity bucket.
A net mismatch figure is obtained by subtracting liabilities and
net off-balance sheet positions from assets in each time band.
The group’s liquidity position is assessed by means of the net
cumulative mismatch position (aggregation of net position
in each successive time band), expressed as a percentage of
total funding related liabilities to the public.
intra-day liquidity management;
daily cash flow management;
liquidity stress and scenario testing; and
liquidity contingency planning.
The cumulative impact of the above principle is monitored,
at least monthly by ALCO and the process is underpinned
by a system of extensive controls. The latter includes the
application of purpose-built technology, documented
The maturity analysis for financial liabilities represents the
basis for effective management of exposure to structural
liquidity risk. Behavioural profiling is applied to assets,
liabilities and off-balance sheet commitments with an
indeterminable maturity or draw-down period, as well as to
certain liquid assets. The monitoring of liquidity risk using
the behavioural adjusted basis is facilitated by the adoption
of maximum mismatch limits and guidelines to restrict the
mismatch between the expected inflows and outflows of
funds in different time buckets.
Anticipated liquidity gap (local currency) (lcy) - All figures in millions
LCY
(Nmillion)
Overnight
1
month
2
months
3
months
4-6
months
7-12
months
13-24
months
> 24
months
Period gap
73,940
(8,962)
(34,136)
(30,186)
1,395
2,380
46,993
56,560
Cumulative gap
73,940
64,978
30,842
657
2,051
4,431
51,424
107,984
Anticipated liquidity gap (foreign currency) (fcy) - All figures in millions
Period
(USDmillion)
Overnight
1
month
2
months
3
months
4-6
months
7-12
months
13-24
months
> 24
months
Period gap
4
55
(34)
(33)
(74)
(202)
(163)
507
Cumulative gap
4
59
25
(8)
(82)
(284)
(447)
60
The group’s ability to withstand huge outflow was very strong as shown in the tables below where the net cumulative mismatch
positions as a percentage of total funding related liabilities were in excess of the limits in all the time bands.
Cumulative gap as a % of TFLRP* - Local currency
Cumulative gap as a % of
TFLRP*
Overnight
1
month
2
months
3
months
4-6
months
7 - 12
months
December 2013
20.46%
17.98%
8.53%
0.18%
0.57%
1.23%
December 2012
33.82%
22.11%
(6.21%)
(12.30%)
(15.52%)
(20.83%)
0%
(5%)
(10%)
(10%)
(15%)
(20%)
1
month
2
months
3
months
4-6
months
7 - 12
months
Limit
Cumulative gap as a % of TFLRP* - Foreign currency
Cumulative gap as a % of
TFLRP*
Overnight
December 2013
0.28%
4.61%
1.93%
(0.65%)
(6.45%)
(22.31%)
December 2012
9.10%
21.20%
14.80%
5.80%
(4.90%)
(19.80%)
0%
(5%)
(10%)
(10%)
(15%)
(20%)
Limit
* TFLRP - Total funding liability related to public.
Based on forecast business growth and the structural dynamics of the balance sheet, ALCO projects long-term funding
requirements, thereby setting targets for long-term funding ratios. The projected long-term ratio is a transparent and practical
measure for the funding desk to target and monitor the pace of raising long-term deposits. There are no limits for mismatches
due to contractually based inflows and outflows.
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Maintaining minimum levels of liquid and
marketable assets
Minimum levels of prudential liquid assets are held in
accordance with all prudential requirements as specified
by the regulatory authorities. The group needs to hold
additional unencumbered marketable assets, in excess of any
minimum prudential liquid asset requirement, to cater for
volatile depositor withdrawals, draw-downs under committed
facilities, collateral calls, etc.
The following criteria apply to readily marketable securities:
as own resource lending, is observed. As mitigants, the group
maintains high levels of unencumbered marketable and liquid
assets in excess of regulatory benchmark.
Intra-day liquidity management
The group manages its exposures in respect of payment and
settlement systems. Counterparties may view the failure to
settle payments when expected as a sign of financial weakness
and in turn delay payments to the group. This can also disrupt
the functioning of payment and settlement systems. At a
minimum, the following operational elements are included in
the group’s intra-day liquidity management:
prices must be quoted by a range of counterparties;
the asset class must be regularly traded;
the asset may be sold or repurchased in a liquid market,
for payment in cash; and
capacity to measure expected daily gross liquidity inflows
and outflows, including anticipated timing where possible;
Maturity analysis of financial liabilities by contractual maturity
The tables below analyses cash flows on a contractual, undiscounted basis based on the earliest date on which the group can
be required to pay (except for trading liabilities and trading derivatives) and may therefore not agree directly to the balances
disclosed in the consolidated statement of financial position.
Derivative liabilities are included in the maturity analysis on a contractual, undiscounted basis when contractual maturities
are essential for an understanding of the derivatives’ future cash flows. Management considers only contractual maturities
to be essential for understanding the future cash flows of derivative liabilities that are designated as hedging instruments in
effective hedge accounting relationships. All other derivative liabilities are treated as trading and are included at fair value in
the redeemable on demand bucket since these positions are typically held for short periods of time.
The following tables also include contractual cash flows with respect to off-balance sheet items which have not yet been
recorded on-balance sheet. Where cash flows are exchanged simultaneously, the net amounts have been reflected.
Maturity analysis of financial liabilities by contractual maturity
capacity to monitor its intraday liquidity positions,
including available credit and collateral;
settlement must be according to a prescribed, rather than
a negotiated, timetable.
Redeemable
on demand
Nmillion
sufficient intraday funding to meet its objectives;
ability to manage and mobilise collateral as required;
the aggregate of 0-3 month deposits and standby
facilities from the 10 largest single deposit counterparties
must not, at any time, exceed 20% of total funding related
liabilities to the public.
Maturing
between
6-12
months
Nmillion
Maturing
after
12 months
Nmillion
Total
Nmillion
robust capacity to manage the timing of its intraday
outflows; and
Financial liabilities
Derivative financial instruments
-
634
139
15
297
1,085
readiness to deal with unexpected disruptions to its
intraday liquidity flows.
Trading liabilities
-
20,664
34,988
9,594
1,714
66,960
310,915
87,923
56,952
12,209
39
468,038
-
-
-
-
6,399
6,399
Subordinated debt
the sum of 0-3 month deposits and standby facilities
provided by any single deposit counterparty must not, at
any time, exceed 10% of total funding related liabilities to
the public; and
Maturing
between
1-6 months
Nmillion
December 2013
Depositor concentration
To ensure that the group does not place undue reliance on
any single entity as a funding source, restrictions are imposed
on the short dated (0-3 months term) deposits accepted from
any entity. These include:
Maturing
within
1 month
Nmillion
Daily cash flow management
The group generates a daily report to monitor significant
cash flows. Maturities and withdrawals are forecast at least
3-months in advance and management is alerted to large
outflows. The report, which is made available to the funding
team, ALM and market risk also summarises material daily new
deposit as well as the interbank and top depositor reliance (by
value and product).
Other borrowings
Total
-
1,196
308
1,422
45,838
48,764
310,915
110,417
92,387
23,240
54,287
591,246
607
877
19,308
44
-
20,836
Unrecognised financial instruments
Letters of credit
Guarantees
Total
-
2,197
5,426
5,229
10,927
23,779
607
3,074
24,734
5,273
10,927
44,615
-
313
459
-
-
772
11,437
16,939
14,788
8,091
37,116
88,371
205,271
109,639
50,320
16,789
32
382,051
-
3,173
389
1,463
61,848
66,873
216,708
130,064
65,956
26,343
98,996
538,067
1,508
602
17,030
5
-
19,145
86
2,102
12,713
9,439
1,333
25,673
1,594
2,704
29,743
9,444
1,333
44,818
December 2012
Concentration risk limits are used to ensure that funding
diversification is maintained across products, sectors, and
counterparties. Primary sources of funding are in the form of
deposits across a spectrum of retail and wholesale clients. As
mitigants, the group maintains marketable securities in excess
of regulatory requirement in order to condone occasional
breaches of concentration limits.
Loan to deposit limit
A limit is put in place, restricting the local currency loan to
deposit ratio to a maximum specified level, which is reviewed
periodically. Similarly, in order to restrict the extent of foreign
currency lending from the foreign currency deposit base, a
foreign currency loan to deposit limit, which is also referred to
The daily cash flow management report forms an integral part
of the ongoing liquidity management process and is a crucial
tool to proactively anticipate and plan for large cash outflows.
Financial liabilities
Trading liabilities
Liquidity stress testing and scenario testing
Anticipated on-and-off balance sheet cash flows are
subjected to a variety of the group specific and systemic
stress scenarios in order to evaluate the impact of unlikely but
plausible events on liquidity positions. Scenarios are based on
both historical events, such as past emerging markets crises,
past local financial markets crisis and hypothetical events,
such as a entity specific crisis. The results obtained from
stress testing provide meaningful input when defining target
liquidity risk positions.
Other borrowings
Total
Unrecognised financial instruments
Letters of credit
Guarantees
Total
108
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Liquidity contingency plans
Market risk
Market risk measurement
The group recognises that it is not possible to hold sufficiently
large enough quantity of readily available liquidity to cover
the least likely liquidity events. However, as such event can
have devastating consequences, it is imperative to bridge the
gap between the liquidity the group chooses to hold and the
maximum liquidity the group might need.
The identification, management, control, measurement and
reporting of market risk is categorised as follows:
The techniques used to measure and control market risk
include:
The group’s liquidity contingency plan is designed to, as far as
possible, protect stakeholder interests and maintain market
confidence in order to ensure a positive outcome in the event
of a liquidity crisis. The plan incorporates an extensive early
warning indicator methodology supported by a clear and
decisive crisis response strategy. Early warning indicators span
group specific crises, systemic crises, contingency planning,
and liquidity risk management governance and are monitored
based on assigned frequencies and tolerance levels. The crisis
response strategy is formulated around the relevant crisis
management structures and addresses internal and external
communications, liquidity generation, operations, as well as
heightened and supplementary information requirements.
Trading market risk
daily net open position;
Stress tests
These risks arise in trading activities where the bank acts as
a principal with clients in the market. The group policy is that
all trading activities are contained within the bank's Corporate
and Investment Banking (CIB) trading operations.
daily VaR;
Stress testing provides an indication of the potential losses
that could occur in extreme market conditions.
back-testing;
other market risk measures; and
The stress tests carried out include individual market risk factor
testing and combinations of market factors on individual asset
classes and across different asset classes. Stress tests include
a combination of historical and hypothetical simulations.
annual net interest income at risk.
PV01
PV01;
Banking book interest rate risk
These risks arise from the structural interest rate risk caused
by the differing re-pricing characteristics of banking assets
and liabilities.
Daily net open position
Foreign currency risk
These risks arise as a result of changes in the fair value or
future cash flows of financial exposures due to changes in
foreign exchange rates.
Foreign currency liquidity management
Equity investment risk
A number of indicators are observed to monitor changes in
either market liquidity or exchange rates. Foreign currency
loans and advances are restricted to the availability of foreign
currency deposits.
These risks arise from equity price changes in listed and
unlisted investments, and managed through the equity
investment committee, which is a sub-committee of the
executive committee.
The board on the input of ALCO sets limits on the level
of exposure by currency and in aggregate for overnight
positions. The latter is also aligned to the net open position
limit as specified by the regulators, which is usually a
proportion of the groups’ capital.
Daily value-at-risk (VaR)
VaR is a technique that estimates the potential losses that
may occur as a result of market movements over a specified
time period at a predetermined probability.
Funding strategy
Funding markets are evaluated on an ongoing basis to ensure
appropriate group funding strategies are executed depending
on the market, competitive and regulatory environment. The
group employs a diversified funding strategy, sourcing liquidity
in both domestic and offshore markets, and incorporates a
coordinated approach to accessing capital and loan markets
across the group.
Concentration risk limits are used within the group to ensure
that funding diversification is maintained across products,
sectors, geographic regions and counterparties.
Primary funding sources are in the form of deposits across
a spectrum of retail and wholesale clients, as well as longterm capital and loan markets. The group remains committed
to increasing its core deposits and accessing domestic
and foreign capital markets when appropriate to meet its
anticipated funding requirements.
Depositor concentrations
Single depositor
Top 10 depositors
2013
%
2012
%
5
4
25
21
the theoretical profits or losses derived purely from market
moves both interest rate and foreign currency spot moves
and it is calculated over 250 cumulative trading-days at 95%
confidence level.
The board approves the market risk appetite and standards
for all types of market risk. The board grants general authority
to take on market risk exposure to the asset and liability
committee (ALCO). ALCO sets market risk policies to ensure
that the measurement, reporting, monitoring and management
of market risk associated with operations of the bank follow a
common governance framework. The bank’s ALCO reports to
EXCO and also to the board risk management committee.
The in-country risk management is subject to SBG oversight for
compliance with group standards and minimum requirements.
The market risk management unit which is independent of
trading operations and accountable to ALCO, monitors market
risk exposures due to trading and banking activities. This unit
monitors exposures and respective excesses daily, report
monthly to ALCO and quarterly to the board risk management
committee.
VaR limits and exposure measurements are in place for all
market risks the trading desk is exposed to. The bank generally
uses the historical VaR approach to derive quantitative
measures, specifically for market risk under normal market
conditions. Normal VaR is based on a holding period of one
day and a confidence level of 95%. Daily losses exceeding
the VaR are likely to occur, on average, 13 times in every
250 days.
The use of historic VaR has limitations as it is based on
historical correlations and volatilities in market prices and
assumes that future prices will follow the observed historical
distribution. Hence, there is a need to back-test the VaR
model regularly. VaR back-testing
The group and the banking business back-test its foreign
currency, interest rate and credit trading exposure VaR model
to verify the predictive ability of the VaR calculations thereby
ensuring the appropriateness of the model. Back-testing
exercise is an ex-post comparison of the daily hypothetical
profit and loss under the one-day buy and hold assumption to
the prior day VaR. Profit or loss for back-testing is based on
PV01 is a risk measure used to assess the effect of a change
of rate of one basis point on the price of an asset. This limit
is set for the fixed income, money market trading, credit
trading, derivatives and foreign exchange trading portfolios.
Other market risk measures
Other market risk measures specific to individual business units
include permissible instruments, concentration of exposures,
gap limits, maximum tenor and stop loss triggers. In addition,
only approved products that can be independently priced and
properly processed are permitted to be traded.
Pricing models and risk metrics used in production systems,
whether these systems are off-the-shelf or in-house
developed, are independently validated by the market risk
unit before their use and periodically thereafter to confirm the
continued applicability of the models. In addition, the market
risk unit assesses the daily liquid closing price inputs used to
value instruments and performs a review of less liquid prices
from a reasonableness perspective at least fortnightly. Where
differences are significant, mark-to-market adjustments are
made.
Annual net interest income at risk
A dynamic forward-looking annual net interest income
forecast is used to quantify the banks’ anticipated interest
rate exposure. This approach involves the forecasting of both
changing balance sheet structures and interest rate scenarios,
to determine the effect these changes may have on future
earnings. The analysis is completed under both normal market
conditions as well as stressed market conditions.
111
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Distribution of trading income in 2013
Analysis of Value-at-Risk (VaR) and actual income
Analysis of average trading revenue
by income stream
The histogram below shows the distribution of daily income The graph below shows the normal VaR analysis and the
and losses during 2013. It captures trading income volatility actual income of the trading unit in 2013. It reflects
and shows the number of days in which the bank’s trading a relative stability in VaR amount despite the fluctuation
related revenues fell within particular ranges. The distribution in trading income.
is skewed to the profit side. Overall, it shows that trading
income was realised on 180 days out of a total of 240 days
with 22 positive outliers.
10
10
Trading income - 2013
Trading income and diversified normal VaR - 2013
Profit
5
100
4
90
3
80
2
(18)
Interest rates
6,911
2,241
208
11
3
267
14,895
8,091
84
PVO1
2013
2012
Nmillion
Nmillion
Limit
Money market
trading book
36.97
595.37
3,700.00
Fixed income
trading book
766.82
2,703.50
3,400.00
Credit trading
book
145.47
4,447.43
3,200.00
Derivatives
trading book
10.08
88.92
500.00
Trading P and L
Lower tail VaR
02/12/2013
02/11/2013
10,000.00
02/10/2013
7,179.65
02/09/2013
2,419.33
02/01/2013
> 0 < 50
> 50 < 100
> 100 < 150
> 150 < 200
> 200 < 250
> 250 < 300
> 300 < 350
> 350 < 400
> 400 < 450
> 450 < 500
> 500
< (500)
> (500) < (450)
> (450) < (400)
> (400) < (350)
> (350) < (300)
> (300) < (250)
> (250) < (200)
> (200) < (150)
> (150) < (100)
> (100) < (50)
> (50) < 0
1,617
Money market
banking book
Analysis of banking book market risk exposures
Banking-related market risk exposure principally involves the management of the potential adverse effect of interest movements
on net interest income.
Upper tail VaR
The table below highlights the historical diversified normal VaR across the various trading desks. The minimum and maximum
trading diversified normal VaR stood at USD130k and USD3.8m respectively with an annual average of USD1.3m which translates
to a very conservative VaR base limit utilisation of 23% on average
Diversified normal VaR exposures (USD’000)
FX Trading
1,329
10,800.00
(5)
Maximum
Minimum
Average
2013
2012
Limit
3,807
130
1,314
224
841
5,610
361
1
19
33
10
88
3,850
108
1,230
209
143
2,300
Fixed Income
Trading
826
2
189
95
320
1,856
Credit Trading
536
9
59
16
512
2,000
Derivatives
549
9
28
15
13
63
Money Markets
Trading
Credit
7,835.22
0
Bankwide
57
1,287.35
(4)
Desk
4,230
Total
10
Nmillions
6,644
(3)
02/08/2013
20
Foreign exchange
The table below shows the PV01 of the money market banking
and the individual trading books. The money market trading
book PV01 exposure was N365k, the money market banking
book PV01 exposure stood at N2.4 million while the fixed
income trading book PV01 exposure was N767k thus reflecting
a very conservative exposure utilisation. Overall, limit discipline
was very good across the banking and trading books.
(2)
02/07/2013
30
Change
%
0
02/06/2013
40
2012
Nmillion
(1)
02/05/2013
50
2013
Nmillion
1
02/04/2013
60
Trading revenue in
streams
Total
02/03/2013
USDmillion
70
Analysis of PV01
The table below shows the breakout of trading revenue by
asset class between the year ending 2013 and 2012.
Equities
02/02/2013
Loss
110
Frequency of Trading Days
110
The risk is transferred to and managed within the bank’s treasury operations under supervision of ALCO. A dynamic, forwardlooking net interest income forecast is used to quantify the bank’s anticipated interest rate exposure. This approach involves the
forecasting of both changing balance sheet structures and interest rate scenarios, to determine the effect these changes may
have on future earnings. Balance sheet projections and the impact on net interest income due to rate changes normally cover a
minimum of 12 months forecasting. The analysis allows for the dynamic interaction of payments, new business and interest rates,
and also captures the effects of embedded or explicit options.
The analyses are done under normal market conditions i.e. under a bullish, expected and bearish interest rate scenario and, under
stressed market conditions in which the banking book is subjected to an upward and downward 450 basis points parallel rate
shock for local currency and 75 basis points for foreign currency.
The table below shows the sensitivity of the bank’s net interest income in response to standardised parallel rate shocks. The
impacts of the rate shocks on the bank’s net interest income are well within the 10% limit.
Measure
LCY parallel rate shock
FCY parallel rate shock
Stress condition
Utilisation (%)
2013
Utilisation (%)
2012
Limit
450
19.69
8.04
10.0%
(450)
(19.67)
(7.37)
10.0%
75
2.08
(3.02)
10.0%
(75)
(6.25)
1.77
10.0%
112
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Market risk on equity investment
Concentrations of currency risk – on- and off-balance sheet financial instruments
The equity committee has governance and oversight of all investment decisions. The committee is tasked with the formulation
of risk appetite and oversight of investment performance. In this regard, a loss trigger is in place for the non-strategic portion.
At 31 December 2013
Foreign exchange risk
Asset
The group takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial
position and cash flows. The board sets limits on the level of exposure by currency and in aggregate for both overnight and intra
day positions, which are monitored daily. The table below summarises the group’s exposure to foreign currency exchange risk as
at 31 December 2013.
Naira
US Dollar
Nmillion
GBP
Euro
Others
Total
Nmillion
Nmillion
Nmillion
Nmillion
Nmillion
91,365
22,386
3,428
2,544
589
120,312
Trading assets
40,711
-
-
-
-
40,711
Pledged assets
24,733
-
-
-
-
24,733
1,492
34
-
-
-
1,526
139,304
-
-
-
-
139,304
Derivative assets
85,023
6,135
-
-
3,022
94,180
180,329
108,648
153
617
-
289,747
Other assets
(67,851)
85,749
(333)
(627)
2,891
19,829
7,716
-
-
-
-
7,716
24,988
-
-
-
-
24,988
527,810
222,952
3,248
2,534
6,502
763,046
Trading liabilities
6,488
60,472
-
-
-
66,960
1,075
10
-
-
-
1,085
37,701
13,984
-
-
1
51,686
323,973
88,192
2,950
1,090
147
416,352
19,132
29,632
-
-
-
48,764
-
6,399
-
-
-
6,399
7,788
-
-
-
-
7,788
39,612
21,498
332
1,445
3,491
66,378
435,769
220,187
3,282
2,535
3,639
665,412
Net on-balance sheet financial position
92,041
2,765
(34)
(1)
2,863
97,634
Off balance sheet
18,281
25,234
65
940
95
44,615
Naira
US Dollar
Nmillion
GBP
Euro
Others
Total
Nmillion
Nmillion
Nmillion
Nmillion
Nmillion
Total assets
519,681
150,200
2,032
1,850
3,056
676,819
Total liabilities
459,352
125,330
2,038
1,858
2,590
591,168
Net on-balance sheet financial position
60,329
24,870
(6)
(8)
466
85,651
Off balance sheet
12,311
27,723
1,006
1,924
1,852
44,817
Total assets
Liabilities
Deposits and current accounts from banks
Deposits and current accounts from customers
Other borrowings
Subordinated debt
Other liabilitiies
Total liabilities
At 31 December 2012
114
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Operational risk
The operational risk and compliance committee (ORCC) serves
as the oversight body in the application of the group’s risk
management framework. This is achieved through enforcing
standards for identification, assessing, controlling, monitoring
and reporting. ORCC reviews and recommends operational risk
appetite and tolerance to the executive committee and board
risk management committee (BRMC).
Approach to managing operational risk
The group’s approach to managing operational risk is to adopt
practices that are fit for purpose, to increase the efficiency
and effectiveness of the group’s resources, minimise losses
and utilise opportunities.
This approach is aligned to the group’s enterprise risk
management framework, policies, procedures and tools
to identify, assess, monitor, control and report such risks
as well as adopt sound practices recommended by various
sources, including the Basel II Accord’s Sound Practices for
the Management and Supervision of Operational Risk and the
regulators. The group continues to embed operational risk
management practices into its day-to-day business activities.
Governance
This information is used to monitor the state of operational
efficiency, address trends, implement corrective action and
manage recovery, where possible.
The group uses key risk indicators (KRIs) to monitor the risks
highlighted in the RCSA process. The implementation of the
KRIs is an integral element of the framework and is therefore
compulsory throughout the group. Business units are
required to report on a regular and event-driven basis. The
reports include a profile of the key risk to the achievement
of their business objectives, control issues of group-level
significance, and operational risks events.
The group maintains adequate insurance to cover key
operational and other risks. Insurance is considered an
effective tool for mitigating operational risks by reducing the
economic impact of operational losses.
Business continuity management (BCM)
The core focus in 2013 was to carry out business impact
analysis (BIA) and conduct Disaster Recovery simulations
to test the ability of the information technology team to
recover and restore the bank’s applications in the event of
unexpected disruptions or disasters as well as testing the
recovery site infrastructure to determine its suitability for
meeting its recovery objectives.
to fraud and corruption. Where necessary, disciplinary, civil
and criminal actions are taken against staff and third parties
who perpetrate fraud; staff found guilty of dishonesty through
the group’s disciplinary processes is listed on appropriate
industry and regulatory databases of dismissed staff.
The group’s financial crime control unit (FCC), which is
responsible for fraud risk management practices, in conjunction
with law enforcement agencies, investigates all losses incurred
as a result of misconduct of staff and criminal intent of third
parties, and proceeds with criminal prosecutions and recovery
of the crime proceeds.
There are anti-fraud mechanisms and regular campaigns in
place to mitigate fraud risk. These measures include; fraud
awareness, prevention, detection and reporting workshops
organized for all members of staff; dissemination of fraud
circulars highlighting new fraud trends; anti bribery and
corruption as well as the whistle blowing policies; distribution
of “Stop Fraud Campaign Letter” to all the registered vendors
of the bank introducing the bank’s whistle blowing hotline and
soliciting for their collaborated efforts in reporting any corrupt
staff; constant review and re-engineering of the group’s
internal processes, engagement of law enforcement agencies,
industry forums and collaborative workshops to discuss best
practices to combat fraud.
Whistle blowing
The BRMC as the delegated risk oversight body on behalf of
the board has the ultimate responsibility for operational risk
management. It ensures quality, integrity and reliability of
operational risk management across the group.
Management and measurement of operational risk
The operational risk management framework serves to ensure
that risk owners are clearly accountable for the risk inherent
within the business activities of the group. The key element in
the framework includes methodologies and tools to identify,
measure, and manage operational risks, a governance model,
and processes to ensure internal training and awareness,
communication, and change management.
Risk and control self assessments (RCSA) are designed to be
forward-looking. Management is required to identify risks
that could threaten the achievement of business objectives
and together with the required set of controls and actions, to
mitigate the risks.
The loss data collection process ensures that all operational
risk loss events and near misses are captured into a centralized
database. The flow of information into the loss event database
is a bottom-up approach. The capture process identifies and
classifies all incidents in terms of an incident classification list.
Information risk management
Information risk is defined as the risk of accidental or
intentional unauthorised use, modification, disclosure or
destruction of information resources, which compromises
their confidentiality, integrity or availability.
From a strategic perspective, information risk management
is treated as a particular discipline within the operational risk
framework. In essence, information risk management not only
protects the group’s information resources from a wide range of
threats, but also enhances business operations, ensures business
continuity, maximises return on investments and supports
the implementation of various services. The approach to the
management of information risk in the group is in accordance
with global best practice, applicable laws and regulations.
The group has embarked on an enterprise-wide comprehensive
awareness/education campaign to ensure that the culture of
information protection is entrenched and the risks associated
with improper handling information are mitigated.
Fraud risk management
The group has a set of values that embraces honesty, integrity
and ethics and, in this regard, has a “zero tolerance” approach
The group actively encourages its employees to embrace its
values, especially in respect of the upholding of the highest
levels of integrity. Consequently, the obligation exists for
employees to report any unlawful, irregular or unethical
conduct that they observe through the requisite whistle
blowing channels.
A whistle-blower may choose to reveal his or her identity when
a report or disclosure is made, and the group will respect and
protect the confidentiality and identity of the whistle-blower.
The only exception to this assurance relates to an overriding
legal obligation to breach confidentiality, where the group
is obligated to reveal confidential information relating to a
whistle-blowing report if ordered to do so by a court of law.
Alternative to confidential reporting, a whistle-blower may
also choose not to reveal his or her identity when reporting or
disclosing any unlawful, irregular or unethical conduct and such
report could be made through the group’s whistle-blowing
hotline which is managed by an independent third party firm.
The systems of the firm managing the whistle-blowing line is
set up in such a way that electronic reporting is non-traceable
through devices such as caller ID and contractually the firm is
not permitted to divulge the identity of the caller to the group
(in the event that it becomes aware of the caller’s identity).
Environmental risk management
The group acknowledges that the development of a corporate
culture whereby environmental protection and the sound
management of natural resources in both its own operating
environment and with all the parties with which it has a business
association is crucial to sustainable development. The group
adopts a precautionary approach to environmental management,
striving to anticipate and prevent environmental degradation in
line with the guidelines set out in the Equator Principles and the
provisions of the environmental laws of Nigeria.
The group has also adopted the sustainability principle that
was recently introduced by the bankers’ committee.
Legal risk management
The group is aware of the potential losses that can arise where
a financial institution faces a negative court judgment or where
a contract does not provide the required legal protection or
where it incurs liability for damages to third parties. It has
therefore established a legal risk function that operates within
the legal services unit and which focuses on managing and
mitigating legal risk.
The legal risk function, as part of the legal risk management
process:
ensures that service agreements are executed between
the group and its services providers;
reviews and monitors legal claims made against the entities
in the group; and
obtains independent legal opinions on all litigation
instituted against the entities within the group.
As a general rule, provisions are made in all instances where,
in the group’s opinion, there is a likelihood that a legal claim
instituted against it may succeed. The amount of such provisions
represents the bank’s estimate of the amount that could be
awarded against it or which it could become liable to pay.
The group also encourages the use of alternative dispute
resolution mechanisms. Such mechanisms, where appropriate,
amicably resolve otherwise difficult litigation and avoid the
lengthy and time consuming processes inherent in litigation.
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Compliance risk management
Compliance risk management is an independent core risk
management activity by the group’s compliance unit, which
is overseen by the chief compliance officer. The unit provides
independent reports to the Operational Risk and Compliance
Committee (ORCC), Executive Committee (EXCO) and Board
Risk Management Committee (BRMC). The group’s approach
to managing compliance risk is proactive and premised on
globally accepted compliance management principles. The
group fosters a culture of compliance which is seen not only as
a requirement of law but also good business practice.
The compliance unit is well positioned to guard against the
risk of failure to comply with applicable laws, regulators,
codes of conduct and standards of good practice, which may
result in regulatory sanctions, financial or reputation loss. It
focuses on ensuring that the group complies with laid down
legislations and regulations that are applicable to its business
and operations.
The unit serves as the interface between the group and the
group’s primary regulators during spot checks and routine
examinations with the aim of ensuring that issues raised during
the spot checks and routine examinations are properly addressed.
Conflict of interest and personal account trading
The group is highly committed to conducting business
professionally, ethically, with integrity and in accordance
with international best practice at all times. In line with its
established framework and policy, conflict of interest situations
are constantly identified and managed.
In the course of the year, 48 deals were cleared through the
standard bank group’s global Compliance Control Room (CCR).
In line with its personal account trading policy, personal trades
carried out by members of staff on their individual stock holding
through the group’s stockbroking subsidiary are reviewed
regularly to ensure that staff have not traded on the shares of
companies that they have material non-public price-sensitive
information on by virtue of their jobs. Members of staff who
trade through external stockbroking firms are required to
notify the compliance unit whenever a trading instruction is
issued. The disclosure is also applicable to trades executed by
connected persons.
Furthermore, all the senior management staff members
including 235 embargoed and nominated employees were
prohibited from trading on the group’s shares with effect from
1st December 2013 until the group’s annual financial results
are formally announced to the public.
Capital management
Capital management
Capital adequacy
Anti Money laundering
The group manages its capital base to achieve a prudent
balance between maintaining capital ratios to support business
growth and depositor confidence, and providing competitive
returns to shareholders. The capital management process
ensures that each group entity maintains sufficient capital
levels for legal and regulatory compliance purposes. The group
ensures that its actions do not compromise sound governance
and appropriate business practices and it eliminates any
negative effect on payment capacity, liquidity and profitability.
The table below summarises the composition of regulatory
capital and the ratios of the group for the period ended 31
December 2013. During the year, the individual entities within
the group and the group complied with all of the externally
imposed capital requirements to which they are subject.
The group attaches utmost importance to ensuring that the
“know your customer” (KYC), anti-money laundering (AML)
and combating financing of terrorism (CFT) regulations and
legislations are strictly adhered to.
Key legislations and regulations that govern anti-money
laundering are the Money Laundering (Prohibition) Act
2011 (as amended); Central Bank of Nigeria (CBN) AML /
CFT Regulation of 2013; Terrorism Prevention Amendment
Act 2013; Terrorism Prevention Regulation 2013; Securities
and Exchange Commission (SEC) AML/CFT Regulation 2013;
Economic and Financial Crimes Commission (EFCC) Act 2004
and various CBN circulars.
In accordance with the relevant provisions of the Money
Laundering (Prohibition) Act 2011 (as amended) and the CBN
AML/CFT Regulation of 2013, up to date training programmes
are organised. The group’s employees were trained on KYC/
AML/CFT issues through the e-learning platform in the course
of the year, where all employees were required to take an on
line assessment to determine their level of understanding with
the topics covered.
All active accounts are categorised into categories A, B, and C
for high, medium and low risk accounts respectively to allow
for a risk-based approach to accounts’ monitoring.
As part of the commitment and resolve to combat the scourge
of money laundering and terrorist financing, the group is on the
verge of rolling out a new anti-money laundering (AML) solution
that would make the process of identifying, investigating and
reporting suspicious transactions more effective.
Nigeria as a country also recorded a major milestone in the area
of AML/CFT in 2013 as the country was removed during the
plenary meeting of the Financial Action Task Force (FATF) held
in Paris, France in October, 2013 from the “Grey list” which
is a list of countries that were identified to have significant
deficiencies in their AML/CFT regime. The removal of Nigeria
from the list was a fall-out of the visit by the International Cooperation Review Group (ICRG) of the FATF to ascertain the
progress made in the area of AML/CFT.
2013
2012
Nmillion
Nmillion
5,000
5,000
Tier 1 capital:
Share capital
Share premium
65,450
65,450
Capital adequacy ratio, which reflects the capital strength of
an entity compared to the minimum regulatory requirements,
is monitored daily by the management, essentially employing
approaches based on the guidelines developed by the
regulators for supervisory purposes. It is calculated by dividing
the capital held by the bank by its risk-weighted assets. Risk
weighted assets are determined by applying prescribed risk
weighting to on and off balance sheet exposures according to
the relative credit risk of the counterparty.
Retained earnings
22,864
15,300
778
(2,341)
Deferred tax asset and
intangible assets
(7,716)
(5,212)
86,376
78,197
3,321
2,310
The regulators require the banking business to hold a minimum
regulatory capital of N25 billion and maintain a minimum of
10% capital adequacy ratio. The required information is filed
monthly with the Central Bank of Nigeria (CBN).
Available-for-sale reserve
221
(68)
Subordinated debt
6,399
-
9,941
2,242
In line with regulatory specification, the group’s regulatory
capital is divided into two tiers:
Total regulatory capital
96,317
80,439
On-balance sheet
360,162
346,011
Off-balance sheet
32,726
31,981
392,888
377,992
24.5%
21.3%
Tier 1 capital: share capital, retained earnings and reserves
created by appropriations of retained earnings.
Tier 2 capital: minority interest arising from consolidation,
fixed asset revaluation reserves, foreign currency revaluation
reserves and general provision subject to a maximum of 1.25%
of risk assets.
Investment in unconsolidated subsidiaries and associations are
deducted from Tier 1 and 2 capital to arrive at the regulatory
capital.
The risk-weighted assets are measured by means of a
hierarchy of five risk weights classified according to the nature
of asset and reflecting an estimate of credit, market and other
risks associated with – each asset and counterparty, taking
into account any eligible collateral or guarantees. A similar
treatment is adopted for off balance sheet exposures, with
some adjustments to reflect the more contingent nature of
the potential losses.
Other reserves
Tier 2 capital:
Risk-weighted assets:
Total risk-weighted assets
Capital adequacy ratio
Regulatory capital compliance
The group complied with minimum capital requirements
imposed by the regulators during the period under review.
Apart from the local requirements, the group is also required
to comply with the capital adequacy requirement in terms
of South African banking regulations measured on Basel
II principles. This act of compliance coupled with the risk
governance structure and implementation of ERM framework
as well as collation of loss data, amongst others, have continued
to reinforce the group’s readiness for a regulatory regime that
is anchored on Basel II principles in the near future.
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120
122
127
128
142
143
144
145
152
153
230
231
Board of directors
Directors’ report
Statement of directors’ responsibility
Statement of profit or less
Annexure A
Annexure B
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Board of directors
Atedo N.A. Peterside con
Sola David-Borha
Dominic Bruynseels
Arnold Gain
Ratan Mahtani
Sim Tshabalala
Chairman
Chief executive Officer
Non-executive
Non-executive
Non-executive
Non-executive
B.Sc, Msc
Appointed: 2012
B.Sc (Econs), MBA
Appointed: 2012
B.Com, FA, BDP
Appointed 2012
Appointed: 2012
BA; LLB; LLM
Appointed: August 2013
Directorships: Stanbic IBTC Bank PLC, Stanbic IBTC
Pension Managers Ltd, Cadbury Nigeria PLC, Nigerian
Breweries PLC, Presco PLC, Unilever Nigeria PLC, Flour
Mills of Nigeria PLC, Lekoil Ltd
Directorships: Stanbic IBTC Bank PLC, Stanbic Nominees
Nigeria Ltd, Stanbic IBTC Stockbrokers Ltd, Stanbic IBTC
Asset Management Ltd, Stanbic IBTC Pension Managers
Ltd, Stanbic IBTC Ventures Ltd, Financial Institutions
Training Centre (FITC), First Securities Discount House,
Credit Reference Company, Frezone Plant Fabrication
Int Ltd, First SMI Investment Company, Fate Foundation,
Redeemers International School
BA Hons, MBA, Associate of Institute of Bankers,
UK, Diploma in Financial Studies
Appointed: 2012
Directorships: Stanbic IBTC Bank PLC, Standard
Bank de Angola, S.A, Stanbic Bank Ghana Limited,
Standard Bank RDC SARL, Stanbic IBTC Pension
Managers Limited
Directorships: Stanbic IBTC Bank PLC
Committee member: board risk management committee
Directorships: Stanbic IBTC Bank PLC, Aegean
Investments Limited, Churchgate Nigeria
Limited, First Century International Limited, Foco
International Investments Limited, T F Kuboye and
Co, International Seafoods Limited
Committee member: audit committee
Committee member: board remunerations
committee, board risk management committee,
board nominations committee
Committee member: board nominations committee,
board risk management committee.
Moses Adedoyin
Sam Cookey
Lilian. I. Esiri
Christopher Newson
Maryam Uwais MFR
Non-executive
Non-executive
Non-executive
Non-executive
Non-executive
FCIB
Appointed: 2012
B.A. Hons A and E D, B.Arch Hons
Appointed: 2012
LLB, BL, LLM
Appointed: 2012
B.Com, CA(SA), CSEP
Appointed: 2012
LLB, LLM
Appointed: 2012
Directorships: Stanbic IBTC Bank PLC, Remofal Ltd,
Allegiance Technologies Ltd, Bank Directors
Association of Nigeria
Directorships: Stanbic IBTC Bank PLC, Space Concepts
Limited, Context Matrix Ltd, Mentor Trinity Ltd
Directorships: Stanbic IBTC Bank PLC, Stanbic IBTC
Asset Management Limited, Podini International
Limited, Veritas Geophysical Nigeria Limited,
Ashburt Leisures Limited, Ashburt Beverages
Limited, Ashburt Oil and Gas Limited
Directorships: Stanbic IBTC Holdings PLC
Directorships: Stanbic IBTC Bank PLC, Wali Uwais
and Co
Committee member: board remuneration commitee,
audit committee
Committee member: board risk management
committee, audit committee
Committee member: board risk management
committee, board nominations committee
Committee member: board remunerations
committee, board risk management committee,
board nominations committee
Committee member: board remuneration committee
Directorships: Stanbic IBTC Bank PLC; Standard
Bank of South Africa; Standard Bank Group; Banking
Association of South Africa.
Committee: Board Remunerations Committee; Board
Nominations Committee
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Directors’ report
For the year ended 31 December 2013
The directors present their report on the affairs of Stanbic IBTC Holdings PLC (“the company”) and its subsidiaries (“the
group”), together with the consolidated financial statements and auditor’s report for the year ended 31 December 2013.
d. Directors’ shareholding
The direct interest of directors in the issued share capital of the company as recorded in the register of directors shareholding
and/or as notified by the directors for the purposes of section 275 and 276 of CAMA and the listing requirements of The
Nigerian Stock Exchang as follows:
a. Legal form
The company was incorporated in Nigeria under the Companies and Allied Matters Act (CAMA) as a public limited liability
company on 14 March 2012. The company’s shares were listed on 23 November 2012 on the floor of The Nigerian Stock
Exchange.
Number of Ordinary shares of Stanbic
IBTC Holdings PLC held as at
December 2013
Number of Ordinary shares of Stanbic
IBTC Holdings PLC held as at
December 2012
120,000,000
118,660,925
527,839
1,664,839
-
-
22,400,554
22,400,554
1,066,668
1,066,668
251,735
251,735
Ifeoma Esiri
42,776,676
52,776,676
Arnold Gain
-
-
28,465,803
28,465,803
Simpiwe Tshabalala
-
-
Christopher Newson
-
-
b. Principal activity and business review
Atedo N. A. Peterside CON
The principal activity of the company is to carry on business as a financial holding company, to invest in and hold controlling
shares in as well as manage equity in its subsidiary companies.
Sola David-Borha
Dominic Bruynseels
The company has eight subsidiaries, namely: Stanbic IBTC Bank PLC, Stanbic IBTC Pension Managers Limited, Stanbic IBTC
Asset Management Limited, Stanbic IBTC Capital Limited, Stanbic IBTC Investments Limited, Stanbic IBTC Stockbrokers Limited,
Stanbic IBTC Ventures Limited and Stanbic IBTC Trustees Limited.
Moses Adedoyin
Sam Cookey
Maryam Uwais MFR
The company prepares consolidated financial statements, which includes separate financial statements of the company. Stanbic
IBTC Investments Limited was non operating as at 31 December 2013 and did not have assets, liabilities or operating results at
reporting date.
Ratan Mahtani *
c. Operating results and dividends
The group’s gross earnings increased by 21%, while profit before tax increased by 116% for the year ended 31 December 2013. The
board recommended the approval of dividend of 80 kobo per share (2012: 10 kobo) for the year ended ended 31 December 2013.
Highlights of the group’s operating results for the year under review are as follows:
* Mr Ratan Mahtani has indirect shareholdings amounting to 1,067,555,439 ordinary shares (Dec 2012: 1,068,346,259)
respectively through First Century International Limited, Churchgate Nigeria Limited, International Seafoods Limited, Foco
International Limited, and R B Properties Limited.
2013
Group
N'million
2012
Group
N'million
2013
Company
N'million
2012
Company
N'million
Gross earnings
111,226
91,860
9,137
1,250
Profit before tax
24,617
11,412
8,216
1,053
Taxation
(3,844)
(1,225)
116
-
Profit after tax
20,773
10,157
8,332
1,053
Non controlling interest
(2,163)
(1,289)
-
-
Profit attributable to the group
18,610
8,868
8,332
1,053
Transfer to retained earnings reserve
Dividend proposed
Total non-performing loans and advances (N'million)
Total non-performing loans to gross loans and advances (%)
e. Directors interest in contracts
There were no director related contracts with the company disclosed to the board during 2013, in compliance with the
requirements of Section 277 of CAMA.
f. Property and equipment
Information relating to changes in property and equipment is given in note 17 to the financial statements. In the directors’
opinion the disclosures regarding the group’s properties are in line with the related statement of accounting policy of the group.
Appropriations:
Transfer to statutory reserve
In terms of section 259 (1) of the Companies and Allied Matters Act 2004, the company shall hold its second annual general
meeting in 2014, and Messrs. Moses Adedoyin; Sam Cookey and Ifeoma Esiri shall retire by rotation and being eligible shall offer
themselves for re–election.
2,439
1,343
-
-
16,171
7,525
8,332
1,053
18,610
8,868
8,332
1,053
8,000
1,000
8,000
1,000
13,407
14,340
-
-
4.4%
5.1%
-
-
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g. Shareholding analysis
j. Donations and Charitable Gifts
The shareholding pattern of the company as at 31 December 2013 is as stated below:
The group made contributions to charitable and non – political organizations amounting to N105,142,175 (Dec 2012:
N154,363,863) during the year.
No. of
shareholders
Percentage of
shareholders
No. of holding
Percentage
holdings
1 - 1,000
39,092
39.1
21,347,568
0.2
Federal University of Technology, FUTA
10,000,000
1,001 - 5,000
38,649
38.7
80,445,549
0.8
Ekiti State SUBEB office
25,000,000
5,001 - 10,000
10,535
10.5
65,466,095
0.7
Nigeria Army Training School Zaria
3,876,850
10,001 - 50,000
8,965
9.0
170,084,878
1.7
Yaba College of Technology
4,557,060
50,001 - 100,000
1,348
1.4
84,696,422
0.9
Lagos Progressive School, Surulere
1,073,500
100,001 - 500,000
1,015
1.0
185,938,301
1.9
Junior Achievement Nigeria
1,950,000
136
0.1
86,785,521
0.9
Youwin Business Finance clinic (Federal Ministry of Finance)
5,000,000
1,000,001 - 5,000,000
91
0.1
187,051,640
1.9
Education Trade Mission to Canada - University of Benin
1,000,000
5,000,001 - 10,000,000
23
0.0
169,709,213
1.7
Federal Inland Revenue Service (FIRS) training sponsorship
3,022,815
10,000,001 - 50,000,000
40
0.0
857,026,475
8.6
Sickle Cell Foundation - Library renovation
2,000,000
50,000,001 - 100,000,000
13
0.0
812,730,135
8.1
2013 Muson Festival – Music Society of Nigeria
1,660,600
100,000,001 - 500,000,000
9
0.0
1,429,633,646
14.3
G.R.A Primary School Ikeja - School Library Project
1,318,350
500,000,001 - 1,000,000,000
1
0.0
747,089,076
7.5
Water Project in two public secondary schools – Maiduguri
2,336,000
1,000,000,001 - 10,000,000,000
1
0.0
5,101,995,481
51.0
Inaboki Secondary School Kaduna
10,000,000
99,918
100.0
10,000,000,000
100.0
Fika Secondary School Yobe State
5,000,000
5,444,066,030
54.4
Share range
500,001 - 1,000,000
Grand Total
Foreign shareholders
156
N
Zuru Community – acquisition centre building
Oriade local government, Osun state
International Women Organization for charity - Small world 2014
h. Substantial interest in shares
Modupe Cole Child Care
According to the register of members as at 31 December 2013, no shareholder held more than 5% of the issued share capital
of the company except the following:
Shareholder
Stanbic Africa Holdings Limited (SAHL)
First Century International Limited
No. of shares held
Percentage shareholding
5,316,268,150
53.2
747,089,076
7.5
Nelson Mandela day celebration
Total
20,000,000
5,150,000
300,000
42,000
1,855,000
105,142,175
k. Events after the reporting date
There were no events after the reporting date which could have a material effect on the financial position of the group as at 31
December 2013 which have not been recognised or disclosed.
l. Human resources
i. Share capital history
Authorised (N000)
Issued and fully paid up
Year
Increase
Cummulative
Increase
Cummulative
2012
10,000,000
10,000,000
10,000,000
10,000,000
Employment of disabled persons
The company continues to maintain a policy of giving fair consideration to applications for employment made by disabled persons
with due regard to their abilities and aptitude. The company’s policy prohibits discrimination of disabled persons or persons with
HIV in the recruitment, training and career development of its employees. In the event of members of staff becoming disabled,
efforts will be made to ensure that, as far as possible, their employment with company continues and appropriate training is
arranged to ensure that they fit into the company’s working environment.
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Health safety and welfare at work
The company enforces strict health and safety rules and practices at the work environment which are reviewed and tested
regularly. The company’s staff are covered under a comprehensive health insurance scheme pursuant to which the medical
expenses of staff and their immediate family are covered up to a defined limit.
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Statement of directors’ responsibilities
in relation to the financial statements
For the year ended 31 December 2013
The directors accept responsibility for the preparation of the annual financial statements set out on pages 1 to 99 that give
a true and fair view in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the
Companies and Allied Matters Act of Nigeria.
Fire prevention and firefighting equipment are installed in strategic locations within the company’s premises.
The company has both Group Personal Accident and Workmen’s Compensation Insurance cover for the benefit of its employees.
It also operates a contributory pension plan in line with the Pension Reform Act 2004.
m. Employee involvement and training
The company ensures, through various fora, that employees are kept informed on matters concerning them. Formal and informal
channels are employed for communication with employees with an appropriate two – way feedback mechanism. In accordance
with the company’s policy of continuous staff development, training facilities are provided in the group’s well equipped Training
School (the Blue Academy). Employees of the Company attend training programmes organized by the Standard Bank Group
(SBG) in South Africa and elsewhere and participate in programmes at the Standard Bank Global Leadership centre in South
Africa. The company also provides its employees with on the job training in the company and at various Standard Bank locations.
n. Auditors
In accordance with Section 357(1) of CAMA, Messrs KPMG Professional Services (“KPMG”) were appointed to act as the
company’s auditors during 2012 financial year. KPMG have indicated their willingness to continue in office as auditors. In
accordance with Section 361 of CAMA, a resolution will be proposed, and if considered appropriate, passed by Shareholders at
the next Annual General Meeting, to authorize the directors to fix their remuneration.
By order of the Board
Chidi Okezie
Company Secretary
FRC/2013/NBA/00000001082
05 February 2014
The directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied
Matters Act of Nigeria and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement whether due to fraud or error.
The directors have made assessment of the company’s ability to continue as a going concern and have no reason to believe that
the company will not remain a going concern in the year ahead.
Signed on behalf of the directors by:
Atedo N.A. Peterside CON
Chairman
FRC/2013/CIBN/00000001069
05 February 2014
Sola David-Borha
Chief Executive Officer
FRC/2013/CIBN/00000001070
05 February 2014
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Introduction
The company is a member of the Standard Bank Group, which
holds a 53.16% equity holding in the company.
Standard Bank Group (“SBG”) is committed to implementing
initiatives that improve corporate governance for the benefit
of all stakeholders. SBG’s board of directors remains steadfast
in implementing governance practices that comply with
international best practice, where substance prevails over form.
Subsidiary entities within SBG are guided by these principles
in establishing their respective governance frameworks, which
are aligned to SBG’s standards in addition to meeting the
relevant jurisdictional requirements in their areas of operation.
Stanbic IBTC Holdings PLC (“the company”), and its subsidiaries
(“the group”), as a member of SBG, operate under a governance
framework which enables the board to balance its role of
providing oversight and strategic counsel with its responsibility
to ensure conformance with regulatory requirements, group
standards and acceptable risk tolerance parameters.
The major subsidiaries of the company; Stanbic IBTC Bank PLC,
Stanbic IBTC Asset Management Limited; Stanbic IBTC Pension
Managers Limited, Stanbic IBTC Trustees Limited; Stanbic IBTC
Stockbrokers, Stanbic IBTC Ventures Limited, Stanbic IBTC
Investments Limited and Stanbic IBTC Capital Limited and their
respective subisidiaries have their own distinct boards and take
account of the particular statutory and regulatory requirements
of the businesses they operate. These subsidiaries operate
under a governance framework that enables their boards to
balance their roles in providing oversight and strategic counsel
with their responsibility for ensuring compliance with the
regulatory requirements that apply in their areas of operation
and the standards and acceptable risk tolerance parameters
adopted by the company. In this regard they have aligned their
respective governance frameworks to that of the company.
As Stanbic IBTC Holdings PLC is the holding company for the
subsidiaries in the group, the company’s board also acts as the
group board, with oversight of the full activities of the group.
and codes, including transparency and accountability, remain
an essential characteristic of its culture. The board monitors
compliance with these by means of management reports,
which include information on the outcome of any significant
interaction with key stakeholders such as regulators.
The group complies with all applicable legislation, regulations,
standards and codes.
Shareholders’ responsibilities
The shareholders’ role is to approve appointments to the
board of directors and the external auditors as well as to grant
approval for certain corporate actions that are by legislation
or the company’s articles of association specifically reserved
for shareholders. Their role is extended to holding the board
accountable and responsible for efficient and effective
corporate governance.
Codes and regulations
The company operates in highly regulated markets and
compliance with applicable legislation, regulations, standards
local knowledge and networks; and
Ultimate responsibility for governance rests with the board of
directors of the company, who ensure that appropriate controls,
systems and practices are in place. The company has a unitary
board structure and the roles of chairman and chief executive
are separate and distinct. The company’s chairman is a nonexecutive director. The number and stature of non-executive
directors ensure that sufficient consideration and debate are
brought to bear on decision making thereby contributing to
the efficient running of the board.
The credentials and demographic profile of the board are
regularly reviewed, to ensure the board’s composition remains
both operationally and strategically appropriate.
One of the features of the manner in which the board operates
is the role played by board committees, which facilitate the
discharge of board responsibilities. The committees each have
a board approved mandate that is regularly reviewed.
The appointment philosophy ensures alignment with all
necessary legislation and regulations which include, but are
not limited to the requirements of the Central Bank of Nigeria;
SEC Code of Corporate Governance; the Companies and
Allied Matters Act as well as the legislations of SBG’s home
country.
Strategy
During 2013, the following developments in the company’s
corporate governance practices occurred:
The board considers and approves the company’s strategy.
Once the financial and governance objectives for the following
year have been agreed, the board monitors performance
against financial objectives and detailed budgets on an ongoing basis, through quarterly reporting.
There was a continued focus on directors training,
particularly in the areas of islamic finance; corporate
governance; and improving board effectiveness.
The provision of an enhanced level of information in the
financial statements provided to shareholders and investors
on an annual and quarterly basis continued.
Regular interaction between the board and the executive
is encouraged. Management is invited, as required, to
make presentations to the board on material issues under
consideration.
Full implementation of the compliance plan with respect
to the Central Bank of Nigeria’s regulation on the Scope of
Banking Activities and Ancillary Matters No 3, 2010 (CBN
Regulation No.3).
Directors are provided with unrestricted access to the
company’s management and company information, as well
as the resources required to carry out their responsibilities,
including external legal advice, at the company’s expense.
Stanbic IBTC Bureau De Change Limited received its final
license from the CBN to commence business as a Bureau
De Change on 20 September 2013.
It is the board’s responsibility to ensure that effective management
is in place to implement the agreed strategy, and to consider
issues relating to succession planning. The board is satisfied that
the current pool of talent available within the company, and the
ongoing work to deepen the talent pool, provides adequate
succession depth in both the short and long term.
The group intends during 2014 to:
Skills, knowledge, experience and attributes of directors
continue the focus on directors’ training via formal training
sessions and information bulletins on issues that are
relevant; and
continue to enhance the level of information provided
to and interaction with shareholders, investors and
stakeholders generally.
knowledge and understanding of both the macroeconomic
and the microeconomic factors affecting the group; Board structure and composition
Developments during 2013
Focus areas for 2014
A number of committees have been established by the
company’s board that assists the board in fulfilling its stated
objectives. The committees’ roles and responsibilities are
set out in their mandates, which are reviewed periodically
to ensure they remain relevant. The mandates set out their
roles, responsibilities, scope of authority, composition and
procedures for reporting to the board.
Board and directors
The board ensures that directors possess the skills, knowledge
and experience necessary to fulfill their obligations. The
directors bring a balanced mix of attributes to the board,
including:
international and domestic experience;
operational experience;
financial, legal, entrepreneurial and banking skills.
Appointment philosophy
Consideration for the appointment of directors and key
executives take into account compliance with legal and
regulatory requirements and appointments to external boards
to monitor potential for conflicts of interest and ensure
directors can dedicate sufficient focus to the company’s
business. The board takes cognisance of the skills, knowledge
and experience of the candidate, as well as other attributes
considered necessary to the prospective role.
During the 2013 financial year, Messrs. Barend Kruger and
John H. Maree resigned from the Board, while Mr. Simpiwe
Tshabalala was appointed as a non-executive director on the
Board. In terms of Section 259 (1) of the Companies and Allied
Matters Act 2004, the company shall hold its second Annual
General Meeting in 2014, and Messrs. Moses Adedoyin; Sam
Cookey and Ifeoma Esiri shall retire by rotation and being
eligible shall offer themselves for re–election.
With these appointment and resignations, the board’s size
as at 31 December 2013 has reduced to eleven, one (1)
executive director and ten (10) non-executive directors. It is
important to note that two non-executive directors, namely,
Mr. Sam Cookey and Mrs. Maryam Uwais (MFR) are designated
as Independent non-executive directors. The board has the
right mix of competencies and experience.
Board responsibilities
The key terms of reference in the board’s mandate, which
forms the basis for its responsibilities, are to:
agree the group’s objectives, strategies and plans for
achieving those objectives;
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annually review the corporate governance process and
assess achievement against objectives;
review its mandate at least annually and approve
recommended changes;
delegate to the chief executive or any director holding any
executive office or any senior executive any of the powers,
authorities and discretions vested in the board’s directors,
including the power of sub-delegation; and to delegate
similarly such powers, authorities and discretions to any
committee and subsidiary company board as may exist or
be created from time to time;
determine the terms of reference and procedures of all
board committees and review their reports and minutes;
consider and evaluate reports submitted by members of
the executive;
consider and approve any significant changes proposed
in accounting policy or practice, and consider the
recommendations of the statutory audit committee;
consider and approve the annual financial statements,
quarterly results and dividend announcements and notices
to shareholders, and consider the basis for determining
that the group will be a going concern as per the
recommendation of the audit committee;
specifically agree, from time to time, matters that are
reserved for its decision, retaining the right to delegate
any of these matters to any committee from time to time
in accordance with the articles of association.
approve capital funding for the group, and the terms and
conditions of rights or other issues and any prospectus in
connection therewith;
approve significant acquisitions, mergers, take-overs,
divestments of operating companies, equity investments
and new strategic alliances by the group;
consider and approve capital expenditure recommended
by the executive committee;
Audit
Committee
IT Steering
Committee
(Programme
of Works)
Delegation of authority
The ultimate responsibility for the company and its operations
rests with the board. The board retains effective control
through a well-developed governance structure of board
committees. These committees provide in-depth focus on
specific areas of board responsibility.
The board delegates authority to the chief executive to
manage the business and affairs of the company. The executive
committee assists the chief executive when the board is not in
session, subject to specified parameters and any limits on the
board’s delegation of authority to the chief executive.
Board Committes
Statutory Committee
ensure that an adequate budget and planning process
exists, performance is measured against budgets and
plans, and approve annual budgets for the group;
Risk
Management
Committee
ensure a balanced and understandable assessment of the
group’s position in reporting to stakeholders;
review and monitor the performance of the chief executive
and the executive team;
approve the remuneration of non-executive directors on the
board and board committees, based on recommendations
made by the remuneration committee, and recommend to
shareholders for approval;
Remuneration
Committee
(REMCO)
Executive
Committee
take ultimate responsibility for regulatory compliance
and ensure that management reporting to the board is
comprehensive;
review non financial matters that have not been specifically
delegated to a management committee; and
establish and review annually, and approve major changes
to, relevant group policies;
Nominations
Committee
Shareholders
assume ultimate responsibility for financial, operational and
internal systems of control, and ensure adequate reporting
on these by committees to which they are delegated;
ensure that an effective risk management process exists
and is maintained throughout the bank and its subsidiaries
to ensure financial integrity and safeguarding of the
group’s assets;
ensure consideration is given to succession planning for
the chief executive and executive management;
Stanbic Ibtc Holdings Plc Board
Membership of the executive committee is set out on page 54.
In addition, a governance framework for executive management
assists the chief executive in her task. Board-delegated authorities
are regularly monitored by the company secretary’s office.
The corporate governance framework adopted by the board
on 28 November 2012 and formalised with mandate approvals
on the same date is set out below:
Management Committee
Operational
Risk and
Compliance
Committee
Risk oversight
committee
Career
Management
Committee
Shared
Service
Operations
EXCO
New Products
Committee
Wealth EXCO
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Board effectiveness and evaluation
Board meetings
The board is focused on continued improvements in its corporate governance performance and effectiveness.
The board meets, at a minimum, once every quarter with ad-hoc meetings being held whenever it was deemed necessary. The
board held a strategy session in August 2013. Directors, in accordance with the articles of association of the company, attend
meetings either in person or via tele/video conferencing.
During the year the directors underwent an evaluation conducted by an independent consultant. The aim of this evaluation was
to assist individual directors, the board and committees to constantly improve their effectiveness. The assessment conducted in
2013 focused on structure, process and effectiveness.
The report on this evaluation was discussed at a board meeting and relevant action points have been noted for implementation
to further improve board functioning.
The performance of the chairman and chief executive are assessed annually, providing a basis to set their remuneration.
Induction and training
An induction programme designed to meet the needs of each new director is being implemented. One-on-one meetings are
scheduled with management to introduce new directors to the company and its operations. The company secretary manages
the induction programme. The Securities and Exchange Commission’s code of conduct is provided to new directors on their
appointment.
Directors are kept abreast of all relevant legislation and regulations as well as sector developments leading to changing risks to
the organisation on an on - going basis. This is achieved by way of management reporting and quarterly board meetings, which
are structured to form part of ongoing training.
Directors attended various trainings at different periods during 2013 that included Islamic Finance, corporate governance, credit
as well as board effectiveness. These trainings were aimed at enhancing the understanding of key issues, and skills of directors.
Executive committee members
As at 31 December 2013, the executive committee comprised of 17 members each with individual responsibilities.
S/n. Name
Responsibility
i Sola David – Borha
Chief executive - Stanbic IBTC Holdings PLC
ii Yinka Sanni
Chief executive - Stanbic IBTC Bank PLC
iii Victor Williams
Executive Director, Corporate and Transactional Banking
iv Obinnia Abajue
Executive Director, Personal and Business Banking
v Wole Adeniyi
Executive Director, Business Support
vi Angela Omo - Dare
Head, Legal Services
vii Olufunke Amobi
Head, Human Resources
viii William le Roux
Head, CIB Credit
ix Chidi Okezie
Company Secretary
x M'fon Akpan
Head, Risk
xi Nkiru Olumide-Ojo
Head, Marketing and Communications
xii Demola Sogunle
Head, Wealth
xiii Babatunde Macaulay
Head, Transactional Products and Services
xiv Arthur Oginga
xv Steve Ideh
Head, Group Internal Audit
xvi Yewande Sadiku
Chief executive - Stanbic IBTC Capital Limited
xvii Rotimi Adojutelegan
Acting Chief Compliance Officer
Directors are provided with comprehensive board documentation at least four days prior to each of the scheduled meetings.
Attendance at board meetings from 1 January – 31 December 2013 is set out in the following table:
Name
February
April
August
October
Atedo Peterside CON Chairman
/
/
/
/
Chris Newson
/
/
/
/
Sola David-Borha
/
/
/
/
Dominic Bruynseels
/
/
/
/
Moses Adedoyin
/
/
/
/
Sam Cookey
/
/
/
/
Ifeoma Esiri
/
/
/
/
Arnold Gain
/
/
/
/
Ben Kruger*
/
/
/
-
Ratan Mahtani
/
/
/
/
John H. Maree**
/
-
-
-
Maryam Uwais MFR
/
A
/
/
Sim Tshabalala***
-
-
-
/
/ = Attendance
A = Apology
- = Not applicable
*Mr Kruger resigned with effect from 19 September 2013
**Mr. Maree resigned with effect from 7 March 2013
***Mr. Tshabalala’s appointment became effective from 20 August 2013
Board committees
Some of the functions of the board have been delegated to board committees, consisting of board members appointed by the
board, which operates under mandates approved at the board meeting of 28 November 2012.
Risk management committee
The board is ultimately responsible for risk management. The main purpose of the risk management committee, as specified in
its mandate is the provision of independent and objective oversight of risk management within the company. The committee is
assisted in fulfilling its mandate by a number of management.
To achieve effective oversight, the committee reviews and assesses the integrity of risk control systems and ensures that risk
policies and strategies are effectively managed and contribute to a culture of discipline and control that reduces the opportunity
for fraud.
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The risk management committee during the period under review was vested, among others, with the following responsibilities:
The chief executive attends meetings by invitation. Other members of executive management are invited to attend when
appropriate. No individual, irrespective of position, is expected to be present when his or her remuneration is discussed.
to oversee management’s activities in managing credit, market, liquidity, operational, legal and other risks of the group;
to periodically review the group’s risk management systems and report thereon to the board;
When determining the remuneration of executive and non-executive directors as well as senior executives, REMCO is expected
to review market and competitive data, taking into account the company’s performance using indicators such as earnings.
to ensure that the group’s material business risks are being effectively identified, quantified, monitored and controlled and
that the systems in place to achieve this are operating effectively at all times; and
REMCO utilises the services of a number of suppliers and advisors to assist it in tracking market trends relating to all levels of staff,
including fees for non-executive directors.
such other matters relating to the group’s risk assets as may be specifically delegated to the committee by the board.
The board reviews REMCO’s proposals and, where relevant, will submit them to shareholders for approval at the annual general
meeting (AGM.). The board remains ultimately responsible for the remuneration policy.
The committee’s mandate is in line with SBG’s standards, while taking account of local circumstances.
As at 31 December 2013, the committee consisted of five directors, all of whom are non–executives.
A more in-depth risk management section which provides details of the overall framework for risk management in the group
commences on page 85 of the consolidated financial statements.
Members’ attendance at REMCO meetings during the financial year ended 31 December 2013 is stated below:
As at 31 December 2013, the committee consisted of six directors, five of whom, including the chairman were non–executives.
Members’ attendance at risk management committee meetings during the financial year ended 31 December 2013
is stated below:
Name
Ifeoma Esiri (Chairman)
Name
Feb
April
Aug
Nov
Dominic Bruynseels (Chairman)
/
/
/
/
Ben Kruger*
/
/
/
-
Maryam Uwais
/
A
/
/
February
April
Aug
Oct
/
/
/
/
Moses Adedoyin
/
/
/
/
/
-
-
-
Sola David-Borha
/
/
/
/
John H. Maree**
Sam Cookey
/
/
/
/
Chris Newson
/
/
/
/
Arnold Gain
/
/
/
/
Sim Tshabalala***
-
-
-
/
Ben Kruger*
/
/
/
-
Chris Newson
/
/
/
/
Dominic Bruynseels
/
/
/
/
/ = Attendance
A = Apology
- = Not applicable
* Mr. Kruger resigned with effect from 19 September 2013
Remuneration committee
The remuneration committee (REMCO) was vested with responsibilities during the year under review that included:
reviewing the remuneration philosophy and policy;
considering the guaranteed remuneration, annual performance bonus and pension incentives of the group’s executive
directors and managers;
reviewing the performance measures and criteria to be used for annual incentive payments for all employees;
determining the remuneration of the chairman and non-executive directors, which are subject to board and shareholder
approval;
considering the average percentage increases of the guaranteed remuneration of executive management across the group,
as well as long-term and short-term incentives; and
agreeing incentive schemes across the group.
/ = Attendance
A = Apology
- = Not applicable
*Mr Kruger resigned with effect from 19 September 2013
**Mr. Maree resigned with effect from 7 March 2013
***Mr. Tshabalala’s appointment became effective from 20 August 2013
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Remuneration
Introduction
The purpose of this section is to provide stakeholders with
an understanding of the remuneration philosophy and policy
applied across the group for executive management, employees,
and directors (executive and non-executive).
Remuneration philosophy
The group’s board and remuneration committee set a
remuneration philosophy which is guided by SBG’s philosophy
and policy as well as the specific social, regulatory, legal and
economic context of Nigeria.
In this regard, the group employs a cost to company structure,
where all benefits are included in the listed salary and
appropriately taxed.
The following key factors have informed the implementation of
reward policies and procedures that support the achievement
of business goals:
the provision of rewards that enable the attraction, retention
and motivation of employees and the development of a
high performance culture;
maintaining competitive remuneration in line with the
market, trends and required statutory obligations;
rewarding people according to their contribution;
allowing a reasonable degree of flexibility in remuneration
processes and choice of benefits by employees;
A key success factor for the group is its ability to attract, retain
and motivate the talent it requires to achieve its strategic and
operational objectives. The group’s remuneration philosophy
includes short-term and long-term incentives to support this
ability.
Short-term incentives, which are delivery specific, are viewed
as strong drivers of competitiveness and performance. A
significant portion of top management’s reward is therefore
variable, being determined by financial performance and
personal contribution against specific criteria set in advance.
This incites the commitment and focus required to achieve
targets.
Remuneration policy
The group has always had a clear policy on the remuneration
of staff, executive and non-executive directors which set
such remuneration at levels that are fair and reasonable in a
competitive market for the skills, knowledge, experience
required and which complies with all relevant tax laws.
REMCO assists the group’s board in monitoring the
implementation of the group remuneration policy, which
ensures that:
Non-executive directors’ receive fixed annual fees and sitting allowances for service on the board and board committees. There
are no contractual arrangements for compensation for loss of office. Non-executive directors do not receive short-term incentives,
nor do they participate in any long-term incentive schemes.
REMCO reviews the non-executive directors’ fees annually and makes recommendations on same to the board for consideration.
Based on these recommendations, the board in turn recommends a gross fee to shareholders for approval at the Annual General
Meeting (AGM).
Category
2014(i)
2013
Chairman
50,287,360
46,220,000
Non-Executive Directors
13,977,536
12,847,000
Chairman
300,000
239,000
Non-Executive Directors
200,000
151,000
Sitting Allowances for Board Meetings (ii)
(i) Proposed for approval by shareholders at the AGM taking place in 2014.
(ii) Fees quoted as sitting allowance represent per meeting sitting allowance paid for board, board committee and ad hoc
meetings. No annual fees are payable to committee members with respect to their roles on such committees.
salary structures and policies, as well as cash and long term
incentives, motivate sustained high performance and are
linked to corporate performance objectives;
Retirement benefits
stakeholders are able to make a reasonable assessment of
reward practices and the governance process; and
2 Executive directors
the group complies with all applicable laws and codes.
educating employees on the full employee value proposition;
Remuneration structure
The board sets the principles for the group‘s remuneration
philosophy in line with the approved business strategy and
objectives. The philosophy aims to maintain an appropriate
balance between employee and shareholder interests. The
deliberations of REMCO inform the philosophy, taking into
account reviews of performance at a number of absolute and
relative levels – from a business, an individual and a competitive
point of view.
Fees
Fees that are payable for the reporting period 1 January to 31 December of each year.
Long-term incentives seek to ensure that the objectives of
management and shareholders are broadly aligned over longer
time periods.
utilising a cost-to-company remuneration structure; and
The group’s remuneration philosophy aligns with its core values,
including growing our people, appropriately remunerating
high performers and delivering value to our shareholders. The
philosophy emphasises the fundamental value of our people
and their role in ensuring sustainable growth. This approach is
crucial in an environment where skills remain scarce.
In terms of CAMA, if a director over the age of 70 is seeking re-election to the board his age must be disclosed to shareholders at
the meeting at which such reelection is to occur.
1 Non-executive directors
Terms of service
Directors are appointed by the shareholders at the AGM,
although board appointments may be made between AGMs.
These appointments are made in terms of the company’s
policy. Shareholder approvals for such interim appointments
are however sought at the annual general meeting that holds
immediately after such appointments are made.
Non-executive directors are required to retire after three years
and may offer themselves for re-election. If recommended
by the board, their re-election is proposed to shareholders
at the AGM.
Non-executive directors do not participate in the pension scheme.
The company had one executive director as at 31 December 2013.
Executive directors receive a remuneration package and qualify for long-term incentives on the same basis as other employees.
Executive director’s bonus and pension incentives are subject to an assessment by REMCO of performance against various
criteria. The criteria include the financial performance of the company, based on key financial measures and qualitative aspects
of performance, such as effective implementation of group strategy and human resource leadership.
3 Management and general staff
Total remuneration packages for employees comprises the following:
guaranteed remuneration – based on market value and the role played;
annual bonus – used to stimulate the achievement of group objectives;
long term incentives – rewards the sustainable creation of shareholder value and aligns behaviour to this goal;
pension – provides a competitive post-retirement benefit in line with other employees.
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Terms of service
Long-term incentives
The audit committee
The minimum terms and conditions for managers are governed
by relevant legislation and the notice period is between one
to three months.
It is essential for the group to retain key skills over the longer
term. The group has put in place an equity growth scheme for
qualifying managers. Participation rights in such scheme are
granted to qualifying managers in accordance with the rules of
the scheme approved by the board.
The role of the audit committee is defined by the
Companies and Allied Matters Act and includes making
recommendations to the board on financial matters. These
matters include assessing the integrity and effectiveness of
accounting, financial, compliance and other control systems.
The committee also ensures effective communication
between internal auditors, external auditors, the board and
management.
Fixed remuneration
Managerial remuneration is based on a total cost-to-company
structure. Cost-to-company comprises a fixed cash portion,
compulsory benefits (medical aid and retirement fund
membership) and optional benefits. Market data is used to
benchmark salary levels and benefits. Salaries are normally
reviewed annually in March.
For all employees, performance-related payments have
formed an increasing proportion of total remuneration over
time to achieve business objectives and reward individual
contribution.
All employees (executives, managers and general staff) are
rated on the basis of performance and potential and this is
used to influence performance-related remuneration rating
and the consequent pay decision is done on an individual basis.
There is therefore a link between rating, measuring individual
performance and reward.
Retention agreements
As part of the company’s strategy to retain highly mobile and
talented employees, the company has selectively entered into
agreements in terms of which retention payments are made.
Retention payments have to be repaid should the individual
concerned leave within a stipulated period.
Post-retirement benefits
Pension
Retirement benefits are typically provided on the same basis
for employees of all levels and are in line and comply with the
Pension Reform Act 2004.
Remuneration for 2013
The amounts specified below represent the total remuneration
paid to executive and non-executive directors for the period
under review:
Short-term incentives
All staff participate in a performance bonus scheme.
Individual awards are based on a combination of business unit
performance, job level and individual performance. In keeping
with the remuneration philosophy, the bonus scheme seeks to
attract and retain high-performing managers.
As well as taking performance factors into account, the size
of the award is assessed in terms of market-related issues
and pay levels for each skill set, which may for instance be
influenced by the scarcity of skills in that area.
The company has implemented a deferred bonus scheme
(DBS) to compulsorily defer a portion of incentives over a
minimum threshold for some senior managers and executives.
This improves alignment of shareholder and management
interests and enables clawback under certain conditions,
which supports risk management.
Fees and sitting allowance
Executive compensation
Total
Group
(N'million)
Company
(N'million)
180
180
73
73
253
253
The group will continue to ensure its remuneration policies
and practices remain competitive, drive performance and are
aligned across the group and with its values.
review the independence and objectivity of the auditors;
and
all such other matters as are reserved to the audit
committee by the Companies and Allied Matters Act and
the company’s Articles of Association.
As required by law, the audit committee members have recent
and relevant financial experience.
Composition
The committee’s key terms of reference comprise various
categories of responsibilities and include the following:
review the audit plan with the external auditors with
specific reference to the proposed audit scope, and
approach to risk activities and the audit fee;
meet with external auditors to discuss the audit findings
and consider detailed internal audit reports with the
internal auditors;
annually evaluate the role, independence and effectiveness
of the internal audit function in the overall context of the
risk management systems;
review the accounting policies adopted by the group and
all proposed changes in accounting policies and practices;
The committee is made up of six members, three of whom are
non - executive directors while the remaining three members
are shareholders elected at the Annual General Meeting
(AGM). The committee, whose membership is stated below,
is chaired by a shareholder representative.
As at 31 December 2013, the committee consisted of the
following persons:
Dr Daru Owei*
Chairman
Barrister Jude Nosagie*
Member
Mr. Tokunbo Akerele*
Member
Mr. Moses Adedoyin**
Member
Mr. Sam Cookey**
Member
Mr. Ratan Mahtani**
Member
consider the adequacy of disclosures;
review the significant differences of opinion between
management and internal audit;
* = Shareholders representative
** = Non Executive Director
Members’ attendance at audit committee meetings for the period 1 Jan to 31 December 2013 is stated below:
Name
January
April
July
October
Dr Daru Owei
-
-
/
/
Mr Moses Adedoyin
/
/
/
/
Mr Sam Cookey
/
/
/
/
Mr Ratan Mahtani
/
/
/
A
Barr Jude Nosagie
/
/
/
/
Mr Tokunbo Akerele
/
/
/
/
/ = Attendance
A = Apology
- = Not applicable
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Company secretary
It is the role of the company secretary to ensure the board
remains cognisant of its duties and responsibilities. In addition
to providing the board with guidance on its responsibilities,
the company secretary keeps the board abreast of relevant
changes in legislation and governance best practices. The
company secretary oversees the induction of new directors,
including subsidiary directors, as well as the ongoing training
of directors. All directors have access to the services of the
company secretary.
Going concern
On the recommendation of the audit committee, the board
annually considers and assesses the going concern basis for
the preparation of the financial statements at the year end.
The board continues to view the company as a going concern
for the foreseeable future.
Management committees
The group has the following management committees:
Executive committee (Exco)
Wealth Exco
Shared services operations Exco
IT steering committee (“program of works”)
Voting at general meetings is conducted either on a show
of hands or a poll depending on the subject matter of
the resolution on which a vote is being cast and separate
resolutions are proposed on each significant issue.
The group is concentrating its social investment expenditure in defined focus area which currently include education in order
to make the greatest impact. These areas of focus will be subject to annual revision as the country socio-economic needs change.
Dealing in securities
The board aims to provide effective and ethical leadership and ensures that its conduct and that of management is aligned to the
organization’s values and code of ethics. The board subscribes to the SBG group’s values and enables decision making at all levels
of the business according to defined ethical principles and values.
In line with its commitment to conduct business professionally
and ethically, the company has introduced policies to restrict the
dealing in securities by directors, shareholder representatives
on the audit committee and embargoed employees. A personal
account trading policy is in place to prohibit employees and
directors from trading in securities during close periods.
Compliance with this policy is monitored on an ongoing basis.
Sustainability
The company as a member of the Standard Bank Group (SBG)
is committed to conducting business professionally, ethically,
with integrity and in accordance with international best
practice. To this end, the company subscribes to and adopts
risk management standards, policies and procedures that have
been adopted by the SBG. The company is also bound by the
Nigerian Sustainable Banking Principles (“the Principles”) and
the provisions of the Principles are incorporated into policies
approved by the Board.
SBG’s risk management standards, policies and procedures
have been amended to be more reflective of the Nigerian
business and regulatory environment. All such amendments
to the risk management standards, policies and procedures
have been agreed to by Standard Bank Africa (SBAF) Risk
Management.
Operational risk and compliance committee
New products committee
Career management committee
Risk oversight committee
Relationship with shareholders
As an indication of its fundamental responsibility to create
shareholder value, effective and ongoing communication with
shareholders is seen as essential. In addition to the ongoing
engagement facilitated by the company secretary and the head
of investor relations, the company encourages shareholders
to attend the annual general meeting and other shareholder
meetings where interaction is welcomed. The chairman of
the company’s audit committee is available at the meeting to
respond to questions from shareholders.
The group is committed to contributing to sustainable
development through ethical, responsible financing and
business practices which unlocks value for our stakeholders.
We manage the environmental and social aspects that impact
our activities, products and services whilst ensuring sustainable
value creation for our customers. We are passionately
committed to encouraging financial inclusion through the
provision of banking and other financial services to all cadres
of the society and a promoter of gender equality.
Social responsibility
As an African business, the group understands the challenges
and benefits of doing business in Africa, and owes its existence
to the people and societies within which it operates.
The group is therefore committed not only to the promotion of
economic development but also to the strengthening of civil
society and human well being.
Ethics and organisational integrity
Compliance with the Securities and Exchange Commission’s code of corporate governance
As a public company, Stanbic IBTC Holdings PLC confirms that throughout the year ended 31 December 2013 the company
has complied with the principles set out in the Securities and Exchange Commission’s Code of Corporate Governance.
The company applies the Code’s principles of transparency, integrity and accountability through its own behaviour, corporate
governance best practice and by adopting, as appropriate and proportionate for a company of its size and nature. The policies
and procedures adopted by the Board and applicable to the company’s businesses are documented in mandates, which also set
out the roles and delegated authorities applying to the Board, Board Committees, and the Executive Committee.
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To the members of Stanbic IBTC Holdings PLC
In compliance with the provisions of Section 359(3) to (6) of
the Companies and Allied Matters Act Cap C20 Laws of the
Federation of Nigeria 2004, the audit committee considered
the audited financial statements for the year ended 31
December 2013 together with the management controls
report from the auditors and the company’s response to this
report at its meeting held on 05 February 2014.
In our opinion, the scope and planning of the audit for the year
ended 31 December 2013 were adequate.
We have exercised our statutory functions under Section 359
(6) of the Companies and Allied Matters Act of Nigeria and
acknowledge the co-operation of management and staff in the
conduct of these responsibilities.
We are of the opinion that the accounting and reporting
policies of the company and the group are in accordance with
legal requirements and agreed ethical practices, and that the
scope and planning of both the external and internal audits for
the period ended 31 December 2013 were satisfactory and
reinforce the group’s internal control systems.
After due consideration, the audit committee accepted the
report of the auditors that the financial statements were in
accordance with ethical practice and International Financial
Reporting Standards and give a true and fair view of the state
of the company’s financial affairs.
The committee reviewed management’s response to the
auditors findings in respect of management matters and we
and the auditors are satisfied with management’s response
thereto.
We are satisfied that the company has complied with the
provisions of Central Bank of Nigeria circular BSD/1/2004
dated 18 February 2004 on “Disclosure of insider related
credits in the financial statements of banks”, and hereby
confirm that an aggregate amount of N27,851,980,227 (31
December 2012: N28,004,048,212) was outstanding as at
31 December 2013. The perfomance status of insider related
credits is as disclosed in note 34.
The committee therefore recommended that the audited
consolidated financial statements of the company for the year
ended 31 December 2013 and the auditor’s report thereon
be approved by the board.
The committee also approved the provision made in
the consolidated financial statements in relation to the
remuneration of the auditors.
Dr Daru Owei
Chairman, audit committee
05 February 2014
FRC/2014/NIM/00000006666
Members of the audit committee are:
1. Dr Daru Owei
2. Mr Moses Adedoyin
3. Mr Sam Cookey
4. Mr Ratan Mahtani
5. Barr Jude Nosagie
6. Mr Tokunbo Akerele
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Other
information
To the Members of Stanbic IBTC Holdings PLC
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Report on the Financial Statements
Opinion
We have audited the accompanying financial statements of
Stanbic IBTC Holdings PLC (‘’the Company”) and its subsidiary
companies (together “the Group”), which comprise the
statements of financial position as at December 31, 2013,
and the statements of profit or loss and other comprehensive
income, statements of changes in equity, and statements of
cash flows for the year then ended, and a summary of significant
accounting policies and other explanatory information, as set
out on pages 142 to 229.
Directors’ Responsibility for the Financial Statements
In our opinion, these financial statements give a true and fair
view of the financial position of Stanbic IBTC Holdings PLC
(“the Company”) and its subsidiaries (together “the Group”)
as at December 31, 2013, and of the Group and Company’s
financial performance and cash flows for the year then ended
in accordance with International Financial Reporting Standards
and in the manner required by the Companies and Allied
Matters Act of Nigeria and the Financial Reporting Council of
Nigeria Act, 2011, the Banks and Other Financial Institutions
Act of Nigeria, and relevant Central Bank of Nigeria circulars.
The directors are responsible for the preparation of financial
statements that give a true and fair view in accordance with
International Financial Reporting Standards and in the manner
required by the Companies and Allied Matters Act of Nigeria,
the Financial Reporting Council of Nigeria Act, 2011, and
the Banks and Other Financial Institutions Act of Nigeria and
relevant Central Bank of Nigeria circulars, and for such internal
control as the directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Report on Other Legal and Regulatory Requirements
Auditor’s Responsibility
Compliance with Section 27 (2) of the Banks and Other
Financial Institutions Act of Nigeria and Central Bank of Nigeria
circular BSD/1/2004
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements that give
a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors,
as well as evaluating the overall presentation of the financial
statements.
Compliance with the requirements of Schedule 6 of the
Companies and Allied Matters Act of Nigeria
In our opinion, proper books of account have been kept by
the Company, so far as appears from our examination of those
books and the Company’s statement of financial position and
the statement of comprehensive income are in agreement
with the books of account.
i.There were no penalties paid by the Company in respect of
contraventions of the Banks and Other Financial Institutions
Act during the year ended 31 December 2013. However,
the Group paid penalties as disclosed in note 37 to the
financial statements.
ii.Related party transactions and balances are disclosed in
note 33 to the financial statements in compliance with the
Central Bank of Nigeria circular BSD/1/2004.
Signed:
Ayodele H. Othihiwa, FCA
FRC/2012/ICAN/00000000425
For: KPMG Professional Services
Chartered Accountants
11 March 2014
Lagos Nigeria
144
145
Group
Company
Group
Note
2012
Nmillion
2013
Nmillion
2012
Nmillion
7
120,312
106,680
2,722
2,625
Trading assets
9
40,711
114,877
-
-
Interest income
Pledged assets
8
24,733
24,440
-
-
Interest expense
Derivative assets
10
1,526
1,709
-
-
11
139,304
85,757
-
-
Loans and advances
12
383,927
290,915
-
-
12
94,180
24,571
-
-
12
289,747
266,344
-
-
Equity Investment in group companies
13
-
-
68,951
68,951
Other assets
15
19,829
22,771
1,038
916
Current tax and deferred tax assets
16
7,716
5,212
118
-
17
24,988
24,458
2,572
16
763,046
676,819
75,401
72,508
Equity
97,634
85,651
71,846
71,503
Equity attributable to ordinary shareholders
94,313
83,341
71,846
71,503
Assets
Equity and liabilities
Ordinary share capital
18
5,000
5,000
5,000
5,000
Share premium
18
65,450
65,450
65,450
65,450
23,863
12,891
1,396
1,053
3,321
2,310
665,412
591,168
3,555
1,005
66,960
88,371
-
-
Reserves
Liabilities
9
Other
information
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
111,226
91,860
9,137
1,250
37,013
33,554
-
-
28.1
62,585
57,818
-
-
28.2
(25,572)
(24,264)
-
-
48,219
33,856
9,137
1,250
Note
Gross earnings
Total assets
Market
Annual&reports
Shareholder
and
information
financial
statements
Statement of profit or loss
2013
Nmillion
Trading liabilities
Business
review
Overview
Net interest income
28.3
32,900
25,568
728
-
Fee and commission revenue
28.3
33,322
25,754
728
-
Fee and commission expense
28.3
(422)
(186)
-
-
Trading revenue
28.4
14,895
8,091
-
-
Other revenue
28.5
424
197
8,409
1,250
85,232
67,410
9,137
1,250
(2,667)
(6,895)
-
-
82,565
60,515
9,137
1,250
(57,725)
(48,789)
(883)
(72)
Total income
28.6
Operating expenses
Staff costs
28.7
(23,851)
(19,953)
(456)
(21)
28.8
(33,874)
(28,836)
(427)
(51)
24,840
11,726
8,254
1,178
(223)
(314)
(38)
(125)
24,617
11,412
8,216
1,053
(3,844)
(1,255)
116
-
20,773
10,157
8,332
1,053
2,163
1,289
-
-
Net income before indirect taxation
Indirect taxation
30.1
Profit before direct taxation
Direct taxation
30.2
10
1,085
772
-
-
19
468,038
382,051
-
-
Deposits from banks
19
51,686
26,632
-
-
19
416,352
355,419
-
-
Profit attributable to:
Other borrowings
20
48,764
66,873
-
-
Non-controlling interests
22
7,788
4,844
2
-
Equity holders of the parent
18,610
8,868
8,332
1,053
Subordinated debt
21
6,399
-
-
-
Profit for the year
20,773
10,157
8,332
1,053
Provisions and other liabilities
23
66,378
48,257
3,553
1,005
763,046
676,819
75,401
72,508
186
50
83
-
Total equity and liabilities
Profit for the year
Earnings per share
Basic earnings per ordinary share (kobo)
Sola David-Borha
Chief Executive Officer
FRC/2013/CIBN/00000001070
05 February 2014
Atedo N.A. Peterside con
Chairman
FRC/2013/CIBN/00000001069
05 February 2014
Arthur Oginga
FRC/2013/IODN/00000003181
05 February 2014
31
The accompanying notes from page 151 to 227 form an integral part of these financial statements.
146
147
Overview
Statement of profit or loss and other comprehensive income
Group
Profit for the year
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
20,773
10,157
8,332
1,053
-
-
-
-
408
3,645
-
-
(153)
269
-
-
255
3,914
-
-
255
3,914
-
-
21,028
14,071
8,332
1,053
2,129
1,255
-
-
18,899
12,816
8,332
1,053
21,028
14,071
8,332
1,053
Other comprehensive income
Items that will never be reclassified to profit or loss
Items that are or may be reclassified subsequently to
profit or loss:
et change in fair value of available-for-sale
N
financial assets
ealised fair value adjustments on available-for-sale
R
financial assets reclassified to income statement
Income tax on other comprehensive income
Other comprehensive income for the year net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Equity holders of the parent
The accompanying notes from page 151 to 227 form an integral part of these financial statements.
Business
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148
149
Overview
Business
review
Market
Annual&reports
Shareholder
and
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financial
statements
Other
information
Statement of changes in equity
Merger
reserve
Nmillion
Statutory
credit risk
reserve
Nmillion
Availablefor-sale
revaluation
reserve
Nmillion
Share-based
payment
reserve
Nmillion
Other
regulatory
reserves
Nmillion
Retained
earnings
Nmillion
Ordinary
shareholders’
equity
Nmillion
Noncontrolling
interest
Nmillion
Total
equity
Nmillion
65,450
(19,123)
-
(3,982)
295
15,077
12,775
79,867
1,911
81,778
-
-
-
-
3,914
-
1,343
7,525
12,782
1,255
14,037
Profit for the year
-
-
-
-
-
-
1,343
7,525
8,868
1,289
10,157
Other comprehensive (loss)/income after tax for the year
-
-
-
-
3,914
-
-
-
3,914
(34)
3,880
Net change in fair value on available-for-sale financial assets
-
-
-
-
3,645
-
-
-
3,645
(34)
3,611
Realised fair value adjustments on available-for-sale financial assets
-
-
-
-
269
-
-
-
269
-
269
-
-
-
-
-
-
-
-
-
-
-
(4,375)
-
-
-
-
67
-
(5,000)
(9,308)
(856)
(10,164)
-
-
-
-
-
67
-
-
67
-
67
(7,500)
-
-
-
-
-
-
-
(7,500)
-
(7,500)
3,125
-
-
-
-
-
-
(3,125)
-
-
-
-
-
-
-
-
-
-
(1,875)
(1,875)
(856)
(2,731)
Balance at 31 December 2012
5,000
65,450
(19,123)
-
(68)
362
16,420
15,300
83,341
2,310
85,651
Balance at 1 January 2013
5,000
65,450
(19,123)
-
(68)
362
16,420
15,300
83,341
2,310
85,651
Total comprehensive income/(loss) for the year
-
-
-
-
289
-
2,439
16,171
18,899
2,129
21,028
Profit for the year
-
-
-
-
-
-
2,439
16,171
18,610
2,163
20,773
Other comprehensive income/(loss) after tax for the year
Ordinary
share
capital
Nmillion
Share
premium
Nmillion
9,375
Total comprehensive (loss)/income for the year
Group
Transactions with shareholders, recorded directly in equity
Equity-settled share-based payment transactions
Shares cancelled on holding company restructuring
Issue of shares on holding company restructuring
Dividends paid to equity holders
-
-
-
-
289
-
-
-
289
(34)
255
-
-
-
-
442
-
-
-
442
(34)
408
Realised fair value adjustments on available-for-sale financial assets
-
-
-
-
(153)
-
-
-
(153)
-
(153)
-
-
-
-
-
-
-
-
-
-
-
Statutory credit risk reserve
-
-
-
769
-
-
-
(769)
-
-
-
-
-
-
-
-
(89)
-
(7,838)
(7,927)
(1,118)
(9,045)
-
-
-
-
-
73
-
-
73
-
73
ransfer of vested portion of equity settled share based payment to
T
retained earnings
-
-
-
-
-
(162)
-
162
-
-
-
-
-
-
-
-
-
-
(8,000)
(8,000)
(1,118)
(9,118)
5,000
65,450
(19,123)
769
221
273
18,859
22,864
94,313
3,321
97,634
Refer to note 18.3 for an explanation of the components of reserve
The accompanying notes from page 151 to 227 form an integral part of these financial statements
150
151
Business
review
Overview
Market
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and
information
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statements
Other
information
Statement of changes in equity
Ordinary
share capital
Nmillion
Share
premium
Nmillion
Available-for-sale
revaluation reserve
Nmillion
Share-based
payment reserve
Nmillion
Other regulatory
reserves
Nmillion
Retained earnings
Nmillion
Ordinary shareholders’
equity
Nmillion
-
-
-
-
-
-
-
-
-
-
-
-
1,053
1,053
Profit for the year
-
-
-
-
-
1,053
1,053
Other comprehensive income/(loss) after tax for the year
-
-
-
-
-
-
-
Net change in fair-value on available-for-sale financial assets
-
-
-
-
-
-
-
Realised fair-value adjustments on available-for-sale financial assets
-
-
-
-
-
-
-
Other
-
-
-
-
-
-
-
5,000
65,450
-
-
-
-
70,450
5,000
65,450
-
-
-
-
70,450
-
-
-
-
-
-
-
5,000
65,450
-
-
-
1,053
71,503
5,000
65,450
-
-
-
1,053
71,503
-
-
-
8,332
8,332
Company
Issue of shares
Profit for the period
-
-
-
-
-
8,332
8,332
Other comprehensive income/(loss) after tax for the period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Realised fair-value adjustments on available-for-sale financial assets
-
-
-
-
-
-
-
Other
-
-
-
-
-
-
-
-
-
-
-
8
(7,997)
(7,989)
-
-
-
-
11
-
11
ransfer of vested portion of equity settled share based payment to
T
retained earnings
-
-
-
-
(3)
3
-
-
-
-
-
-
(8,000)
(8,000)
5,000
65,450
-
-
8
1,388
71,846
152
153
Overview
Group
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Net cash flows from operating activities
91,682
15,476
10,678
1,141
Cash flows used in operations
58,110
(13,691)
10,678
1,141
24,617
11,412
8,216
1,053
(30,285)
(23,657)
36
-
Credit impairment charges on loans and advances
2,667
6,895
-
-
Depreciation of property and equipment
4,053
3,410
25
-
(98)
(112)
-
-
73
67
11
-
Adjusted for:
Dividends included in trading revenue and investment income
Equity-settled share-based payments
Interest expense
Interest income
Loss/(profit) on sale of property and equipment
25,572
24,264
-
-
(62,585)
(57,818)
-
-
33
(49)
-
-
Increase in income-earning assets
32.1
(18,368)
(102,005)
(122)
(916)
Increase in deposits and other liabilities
32.2
82,146
100,245
2,548
1,004
98
112
-
-
(25,572)
(24,264)
-
-
Interest received
62,585
57,818
-
-
Direct taxation paid
(3,539)
(4,499)
-
-
(57,908)
8,941
(2,581)
(3,516)
(27)
(89)
-
-
(4,715)
(2,091)
(2,581)
(16)
-
(30)
-
-
126
657
-
-
-
3,494
-
-
(53,292)
7,000
-
-
-
-
Dividends received
Interest paid
Net cash flows used in investing activities
Capital expenditure on:
- Property
- Equipment, furniture and vehicles
- Intangible assets
roceeds from sale of property, equipment, furniture
P
and vehicles
Proceeds from sale of intangible assets
(Purchase)/Sale of financial investment securities
Investment in new subsdiary – Stanbic IBTC Capital Limited
Net cash flows used in financing activities
Net increase/(decrease) in other borrowings
Inflow received from Stanbic IBTC Bank PLC
Proceed from issue subordinated debt
Special dividend paid on share cancellation
Net dividends paid
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
32.3
Other
information
Company
Nmillion
Net income before indirect taxes
Market
Annual&reports
Shareholder
and
information
financial
statements
Note
Business
review
of assets, liabilities, income and expenses. Actual results may
differ from these estimates.
Stanbic IBTC Holdings PLC (the ‘company’) is a company
domiciled in Nigeria. The company registered office is at
I.B.T.C. Place Walter Carrington Crescent Victoria Island,
Lagos, Nigeria. These consolidated financial statements
comprise the company and its subsidiaries (together referred
to as the ‘group’). The group is primarily involved in the
provision of banking and other financial services to corporate
and individual customers.
Estimates and underlying assumptions are reviewed on
an on-going basis. Revisions to accounting estimates are
recognised in the period in which estimates are revised and in
any future period affected. Information about significant area
of estimation uncertainty and critical judgement in applying
accounting policies that have most significant effect on the
amount recognised in the consolidated financial statements
are included in note 6.
2. Basis of preparation
3. Changes in accounting policies
(a) Statement of compliance
These consolidated financial statements have been prepared
in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The financial statements comply with
the Company and Allied Matters Act of Nigeria, Bank and
Other Financial Institution Act, Financial Reporting Council
of Nigeria Act, and relevant Central Bank of Nigeria circulars.
The consolidated financial statements were authorised for
issue by the Board of Directors on 05 February 2014.
(b) Basis of measurement
The consolidated financial statements have been prepared on
the historical cost basis except for the following material items
in the statement of financial position:
Except as noted below, the group has consistently applied
the accounting policies as set out in Note 4 to all periods
presented in these financial statements.
The group adopted the following new standards and
amendments to standards, including any consequential
amendments to other standards, with a date of initial
application of 1 January 2013.
IFRS 10 Consolidated financial statements (2011)
IFRS 12 Disclosure of interests in other entities
IFRS 13 Fair value measurement
derivative financial instruments are measured at fair value.
Disclosures – offsetting financial assets and financial
liabilities (Amendments to IFRS 7)
financial instruments at fair value through profit or loss are
measured at fair value.
Presentation of items of other comprehensive income
(amendments to IAS 1)
available-for-sale financial assets are measured at fair value.
The nature and effect of the changes are explained below.
liabilities for cash-settled share-based
arrangements are measured at fair value.
(a) Subsidiaries including structure entities
As a result of IFRS 10, the group has changed its accounting
policy for determining whether it has control over and
consequently whether it consolidates other entities. IFRS
10 introduces a new control model that focuses on whether
the group has power over an investee, exposure or rights to
variable returns from its involvement with the investee and
the ability to use its power to affect those returns.
(3,500)
(20,828)
9,024
(8,000)
5,000
(18,109)
19,255
-
-
-
-
-
5,000
6,399
-
-
-
-
(7,500)
-
-
(9,118)
(2,731)
(8,000)
-
686
(384)
-
-
13,632
33,057
97
2,625
106,680
73,623
2,625
-
120,312
106,680
2,722
2,625
1. Reporting entity
payment
trading liabilities are measured at fair value.
(c) Functional and presentation currency
The consolidated financial statements are presented in
Nigerian Naira, which is the company’s functional and
presentation currency. All financial information presented in
Naira has been rounded to the nearest million, except when
otherwise stated.
(d)Use of estimates and judgement
The preparation of the consolidated financial statements
in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the
application of accounting policies and the reported amount
The change did not have a material impact on the group
financial statements. No additional entity is consolidated as a
result of the adoption of IFRS 10.
(b) Interest in other entities
As a result of IFRS 12, the group has expanded disclosures
about its interests in subsidiaries (see Note 13) and involvement
with unconsolidated strutured entities (see Note 14).
154
155
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Notes to the annual financial statements (continued)
The disclosure requirements related to its involvement in
unconsolidated structured entities are not included in the
comparative information.
(c) Fair value measurement
In accordance with the transitional provisions of IFRS 13, the
group has applied the new definition of fair value, as set out in
Note 4.16, prospectively. The change had no significant impact
on the measurements of the group’s assets and liabilities,
but the group has included new disclosures in the financial
statements, which are required in the comparative information.
(d) Offsetting financial assets and financial liabilities
As a result of the amendments to IFRS 7, the group has
expanded disclosures about offsetting financial assets and
financial liabilities (see Note 26).
(e) Presentation of items of other comprehensive income (OCI)
As a result of the amendments to IAS 1, the group has modified
the presentation of items of OCI in its statements of profit or
loss and OCI, to present items that would be reclassified to
profit or loss in the future separately from those that would
never be. Comparative information has been represented on
the same basis.
4. Statement of significant accounting policies
Except for the changes explained in note 3, the group has
consistently applied the following accounting policies to all
periods presented in these consolidated financial statements.
4.1 Basis of consolidation
Subsidiaries
The group consolidates the annual financial statements of
investees which it controls. The group controls an investee when:
it has power over the investee;
has exposure or rights to variable returns from its
involvement with the investee; and
has the ability to use its power to affect the returns from
its involvement with the investee.
The annual financial statements of the investee are
consolidated from the date on which the group acquires
control up to the date that control ceases. Control is assessed
on a continuous basis.
Intragroup transactions, balances and unrealised gains and
losses are eliminated on consolidation. Unrealised losses are
eliminated in the same manner as unrealised gains, but only to
the extent that there is no evidence of impairment.
The proportion of comprehensive income and changes in
equity allocated to the group and non-controlling interests
are determined on the basis of the group’s present ownership
interest in the subsidiary.
The accounting policies of subsidiaries that are consolidated
by the group conform to these policies.
Investments in subsidiaries are accounted for at cost less
accumulated impairment losses (where applicable) in the
separate financial statements. The carrying amounts of these
investments are reviewed annually and impaired (limited to
initial cost) when necessary.
Business combinations
The acquisition method of accounting is used to account for
the acquisition of subsidiaries by the group. The consideration
transferred is measured as the sum of the fair value of the
assets given, equity instruments issued and liabilities incurred
or assumed at the acquisition date. The consideration includes
any asset, liability or equity resulting from a contingent
consideration arrangement.
The obligation to pay contingent consideration is classified
as either a liability or equity based on the terms of the
arrangement. The right to a return of previously transferred
consideration is classified as an asset. Transaction costs
for business combinations prior to 1 January 2010 were
capitalised as part of the consideration transferred.
Transaction costs for business combinations on or after 1
January 2010 are recognised within profit or loss as and when
they are incurred.
Where the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
business combination occurs, the group reports provisional
amounts. Where applicable, the group adjusts retrospectively
the provisional amounts to reflect new information obtained
about facts and circumstances that existed at the acquisition
date and affected the measurement of the provisional amounts.
The group elects on each acquisition to initially measure noncontrolling interests on the acquisition date at either fair value
or at the non-controlling interest’s proportionate share of the
subsidiary’s identifiable net assets.
Identifiable assets acquired, liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective
of the extent of any non-controlling interest. The excess
of the sum of the consideration transferred (including
contingent consideration), the value of non-controlling
interest recognised and the acquisition date fair value of
any previously held equity interest in the subsidiary over the
fair value of identifiable net assets acquired is recorded as
goodwill and accounted for in terms of accounting policy 4.6
– Intangible assets.
If the sum of the consideration transferred including
contingent consideration, the value of non-controlling
interest recognised and the acquisition date fair value of any
previously held equity interest in the subsidiary is less than
the fair value of the identifiable net assets acquired, the
difference, referred to as a gain from a bargain purchase, is
recognised directly in profit or loss.
When a business combination occurs in stages, the previously
held equity interest is remeasured to fair value at the
acquisition date and any resulting gain or loss is recognised
in profit or loss.
Non-monetary assets and liabilities denominated in foreign
currencies that are measured at historical cost are translated
using the exchange rate at the transaction date, and those
measured at fair value are translated at the exchange rate at
the date that the fair value was determined.
Exchange rate differences on non-monetary items are
accounted for based on the classification of the underlying
items. Foreign exchange gains and losses on equities
(debt) classified as available-for-sale financial assets are
recognised in the available-for-sale reserve in OCI (profit
or loss) whereas the exchange differences on equities and
debt that are classified as held at fair value through profit
or loss are reported as part of the fair value gain or loss in
profit or loss.
4.3 Cash and cash equivalents
Transactions with non-controlling interests
Transactions with non-controlling interests that do not result
in the gain or loss of control, are accounted for as transactions
with equity holders of the group. For purchases of additional
interests from non-controlling interests, the difference
between the purchase consideration and the group’s
proportionate share of the subsidiary’s additional net asset
value acquired is accounted for directly in equity. Gains or
losses on the partial disposal (where control is not lost) of the
group’s interest in a subsidiary to non-controlling interests are
also accounted for directly in equity.
Common control transactions
Common control transactions, in which the company is the
ultimate parent entity both before and after the transaction,
are accounted for at book value.
4.2 Foreign currency translations
Items included in the annual financial statements of each of
the group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(functional currency).
The annual financial statements are presented in Nigerian
Naira, which is the functional and presentation currency of
Stanbic IBTC Holdings PLC.
Transactions and balances
Foreign currency transactions are translated into the
respective functional currencies of group entities at exchange
rates prevailing at the date of the transactions. Foreign
exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies at year end
exchange rates, are recognised in profit or loss (except when
recognised in OCI as part of qualifying cash flow hedges and
net investment hedges).
Cash and balances with central banks comprise coins and
bank notes, and balances with central banks. Cash and cash
equivalents presented in the statement of cash flows consist
of cash and balances with central banks, and current account
balances with other banks.
4.4 Financial instruments
Initial recognition and measurement
Financial instruments include all financial assets and liabilities.
These instruments are typically held for liquidity, investment,
trading or hedging purposes. All financial instruments are
initially recognised at fair value plus directly attributable
transaction costs, except those carried at fair value through
profit or loss where transaction costs are recognised
immediately in profit or loss.
Financial instruments are recognised (derecognised) on the
date the group commits to purchase (sell) the instruments
(trade date accounting).
Subsequent measurement
Subsequent to initial measurement, financial instruments are
measured either at fair value or amortised cost, depending on
their classifications as follows:
Held-to-maturity financial assets and liabilities
Held-to-maturity investments are non-derivative financial
assets with fixed or determinable payments and fixed
maturities that management has both the positive intent and
ability to hold to maturity. Where the group is to sell more than
an insignificant amount of held-to-maturity investments, the
entire category would be tainted and reclassified as availablefor-sale assets with the difference between amortised cost
and fair value being accounted for in OCI.
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Held-to-maturity investments are carried at amortised cost,
using the effective interest method, less any impairment losses.
Held-for-trading financial assets and liabilities
Held-for-trading assets and liabilities include those financial
assets and liabilities acquired or incurred principally for the
purpose of selling or repurchasing in the near term, those
forming part of a portfolio of identified financial instruments
that are managed together and for which there is evidence
of a recent actual pattern of short-term profit-taking, and
commodities that are acquired principally by the group for
the purpose of selling in the near future and generating a
profit from fluctuations in price or broker-traders’ margin.
Derivatives are always categorised as held-for-trading.
Subsequent to initial recognition, the financial instruments’
fair values are remeasured at each reporting date. All gains
and losses, including interest and dividends arising from
changes in fair value are recognised in profit or loss as trading
revenue within non-interest revenue.
Financial assets and liabilities designated at fair value through
profit or loss
The group designates certain financial assets and liabilities,
other than those classified as held-for-trading, as at fair value
through profit or loss when
this designation eliminates or significantly reduces an
accounting mismatch that would otherwise arise. Under this
criterion, the main classes of financial instruments designated
by the group are loans and advances to banks and customers
and financial investments. The designation significantly
reduces measurement inconsistencies that would have
otherwise arisen. For example, where the related derivatives
were treated as held-for-trading and the underlying financial
instruments were carried at amortised cost;
groups of financial assets, financial liabilities or both are
managed, and their performance evaluated, on a fair value
basis in accordance with a documented risk management
or investment strategy, and reported to the group’s key
management personnel on a fair-value basis. Under this
criterion, certain private equity, short-term insurance and
other investment portfolios have been designated at fair
value through profit or loss; or
f inancial instruments containing one or more embedded
derivatives that significantly modify the instruments’
cash flows.
The fair value designation is made on initial recognition and
is irrevocable. Subsequent to initial recognition, the fair
values are remeasured at each reporting date. Gains and
losses arising from changes in fair value are recognised in
interest income (interest expense) for all debt financial assets
(financial liabilities) and in other revenue within non-interest
revenue for all equity instruments.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an
active market, other than those classified by the group as at
fair value through profit or loss or available-for-sale.
Loans and receivables are measured at amortised cost using
the effective interest method, less any impairment losses.
Origination transaction costs and origination fees received that
are integral to the effective rate are capitalised to the value of
the loan and amortised through interest income as part of the
effective interest rate. The majority of the group’s loans and
advances are included in the loans and receivables category.
Available-for-sale
Financial assets classified by the group as available-forsale are generally strategic capital investments held for an
indefinite period of time, which may be sold in response to
needs for liquidity or changes in interest rates, exchange rates
or equity prices, or non-derivative financial assets that are not
classified within another category of financial assets.
asset is no longer held for the purpose of selling it in the near
term. Financial assets that would not otherwise have met
the definition of loans and receivables are permitted to be
reclassified out of the held-for-trading category only in rare
circumstances. In addition, the group may choose to reclassify
financial assets that would meet the definition of loans and
receivables out of the held-for-trading or available-for-sale
categories if the group, at the date of reclassification, has
the intention and ability to hold these financial assets for the
foreseeable future or until maturity.
Derivatives or any financial instrument designated at fair value
through profit or loss shall not be reclassified out of their
respective categories.
Reclassifications are made at fair value as of the reclassification
date. Effective interest rates for financial assets reclassified
to loans and receivables, held-to-maturity and available-forsale categories are determined at the reclassification date.
Subsequent increases in estimates of cash flows adjust the
financial asset’s effective interest rates prospectively.
On reclassification of a trading asset, all embedded derivatives
are reassessed and, if necessary, accounted for separately.
loans for which the group has identified objective evidence
of default, such as a breach of a material loan covenant or
condition as well as those loans for which instalments are due
and unpaid for 90 days or more.
The impairment of non-performing loans takes into account
past loss experience adjusted for changes in economic
conditions and the nature and level of risk exposure since the
recording of the historic losses.
When a loan carried at amortised cost has been identified
as specifically impaired, the carrying amount of the loan
is reduced to an amount equal to the present value of its
estimated future cash flows, including the recoverable
amount of any collateral, discounted at the financial asset’s
original effective interest rate. The carrying amount of the
loan is reduced through the use of a specific credit impairment
account and the loss is recognised as a credit impairment
charge in profit or loss.
The calculation of the present value of the estimated future
cash flows of collateralised financial assets recognised on an
amortised cost basis includes cash flows that may result from
foreclosure less costs of obtaining and selling the collateral,
whether or not foreclosure is probable.
Impairment of financial assets
Available-for-sale financial assets are subsequently measured at
fair value. Unrealised gains or losses are recognised directly in the
available-for-sale reserve until the financial asset is derecognised
or impaired. When debt (equity) available-for-sale financial
assets are disposed of, the cumulative fair value adjustments in
OCI are reclassified to interest income (other revenue).
Available-for-sale financial assets are impaired when there has
been a significant or prolonged decline in the fair value of
the financial asset below its cost. The cumulative fair value
adjustments previously recognised in OCI on the impaired
financial assets are reclassified to profit or loss. Reversal of
impairments on equity available-for-sale financial assets are
recognised in OCI.
Interest income, calculated using the effective interest
method, is recognised in profit or loss. Dividends received on
debt (equity) available-for-sale instruments are recognised in
interest income (other revenue) within profit or loss when the
group’s right to receive payment has been established.
Financial liabilities at amortised cost
Financial liabilities that are neither held for trading nor
designated at fair value are measured at amortised cost.
Reclassification of financial assets
The group may choose to reclassify non-derivative trading
assets out of the held-for-trading category if the financial
Assets carried at amortised cost
The group assesses at each reporting date whether there is
objective evidence that a loan or group of loans is impaired.
A loan or group of loans is impaired if objective evidence
indicates that a loss event has occurred after initial recognition
which has a negative effect on the estimated future cash flows
of the loan or group of loans that can be estimated reliably.
If the group determines that no objective evidence of
impairment exists for an individually assessed loan, whether
significant or not, it includes the loan in a group of financial
loans with similar credit risk characteristics and collectively
assesses for impairment. Loans that are individually assessed
for impairment and for which an impairment loss is recognised
are not included in a collective assessment for impairment.
where the group, for economic or legal reasons relating to
the borrower’s financial difficulty, grants the borrower a
concession that the group would not otherwise consider.
Impairment of groups of loans that are assessed collectively is
recognised where there is objective evidence that a loss event
has occurred after the initial recognition of the group of loans
but before the reporting date. In order to provide for latent
losses in a group of loans that have not yet been identified as
specifically impaired, a credit impairment for incurred but not
reported losses is recognised based on historic loss patterns
and estimated emergence periods (time period between the
loss trigger events and the date on which the group identifies
the losses). Groups of loans are also impaired when adverse
economic conditions develop after initial recognition, which
may impact future cash flows. The carrying amount of groups
of loans is reduced through the use of a portfolio credit
impairment account and the loss is recognised as a credit
impairment charge in profit or loss.
The group first assesses whether there is objective evidence
of impairment individually for loans that are individually
significant, and individually or collectively for loans that are not
individually significant. Non-performing loans include those
Increases in loan impairments and any subsequent reversals
thereof, or recoveries of amounts previously impaired
(including loans that have been written off), are reflected
within credit impairment charges in profit or loss. Previously
Criteria that are used by the group in determining whether
there is objective evidence of impairment include:
known cash flow difficulties experienced by the borrower;
a breach of contract, such as default or delinquency in
interest and/or principal payments;
breaches of loan covenants or conditions
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impaired loans are written off once all reasonable attempts at
collection have been made and there is no realistic prospect of
recovering outstanding amounts. Any subsequent reductions
in amounts previously impaired are reversed by adjusting the
allowance account with the amount of the reversal recognised
as a reduction in impairment for credit losses in profit or loss.
Subsequent to impairment, the effects of discounting unwind
over time as interest income.
Renegotiated loans
Loans that would otherwise be past due or impaired and whose
terms have been renegotiated and exhibit the characteristics
of a performing loan are reset to performing loan status.
Loans whose terms have been renegotiated are subject to
ongoing review to determine whether they are considered to
be impaired or past due.
The effective interest rate of renegotiated loans that have
not been derecognised (described under the heading
Derecognition of financial instruments), is redetermined
based on the loan’s renegotiated terms.
Available-for-sale financial assets
Available-for-sale financial assets are impaired if there is
objective evidence of impairment, resulting from one or more
loss events that occurred after initial recognition but before
the reporting date, that have a negative impact on the future
cash flows of the asset. In addition, an available-for-sale
equity instrument is considered to be impaired if a significant
or prolonged decline in the fair value of the instrument below
its cost has occurred. In that instance, the cumulative loss,
measured as the difference between the acquisition price
and the current fair value, less any previously recognised
impairment losses on that financial asset, is reclassified from
OCI to profit or loss.
Income and expenses are presented on a net basis only when
permitted by the accounting standards, or for gains and losses
arising from a group of similar transactions.
A derivative is a financial instrument whose fair value changes
in response to an underlying variable, requires no initial net
investment or an initial net investment that is smaller than
would be required for other types of contracts that would
be expected to have a similar response to changes in market
factors and is settled at a future date. Derivatives are initially
recognised at fair value on the date on which the derivatives
are entered into and subsequently remeasured at fair value as
described under the fair value policy under note 4.16.
All derivative instruments are carried as financial assets when
the fair value is positive and as financial liabilities when the fair
value is negative, subject to offsetting principles as described
under the heading “Offsetting financial instruments” above.
Embedded derivatives included in hybrid instruments are treated
and disclosed as separate derivatives when their economic
characteristics and risks are not closely related to those of the
host contract, the terms of the embedded derivative are the
same as those of a stand-alone derivative and the combined
contract is not measured at fair value through profit or loss.
The financial host contracts are accounted for and measured
applying the rules of the relevant financial instrument category.
All gains and losses from changes in the fair values of
derivatives are recognised immediately in profit or loss as
trading revenue.
Borrowings
Borrowings are recognised initially at fair value, generally being
their issue proceeds, net of directly attributable transaction
costs incurred. Borrowings are subsequently measured at
amortised cost and interest is recognised using the effective
interest method.
If, in a subsequent period, the amount relating to an impairment
loss decreases and the decrease can be linked objectively to
an event occurring after the impairment loss was recognised
in profit or loss, the impairment loss is reversed through profit
or loss for available-for-sale debt instruments. Any reversal of
an impairment loss in respect of an available-for-sale equity
instrument is recognised directly in OCI.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the
group (issuer) to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to
make payment when due in accordance with the original or
modified terms of a debt instrument.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount
reported in the statement of financial position when there is
a legally enforceable right to set-off the recognised amounts
and there is an intention to settle the asset and the liability
on a net basis, or to realise the asset and settle the liability
simultaneously.
Financial guarantee contracts are initially recognised at fair
value, which is generally equal to the premium received,
and then amortised over the life of the financial guarantee.
Subsequent to initial recognition, the financial guarantee
liability is measured at the higher of the present value of any
expected payment, when a payment under the guarantee has
become probable, and the unamortised premium.
De-recognition of financial instruments
Financial assets are derecognised when the contractual rights
to receive cash flows from the financial assets have expired,
or where the group has transferred its contractual rights
to receive cash flows on the financial asset such that it has
transferred substantially all the risks and rewards of ownership
of the financial asset. Any interest in transferred financial
assets that is created or retained by the group is recognised
as a separate asset or liability.
The group enters into transactions whereby it transfers assets
recognised in its statement of financial position, but retains
either all or a portion of the risks or rewards of the transferred
assets. If all or substantially all risks and rewards are retained,
then the transferred assets are not derecognised. Transfers
of assets with the retention of all or substantially all risks and
rewards include securities lending and repurchase agreements.
When assets are sold to a third party with a concurrent total
rate of return swap on the transferred assets, the transaction
is accounted for as a secured financing transaction, similar
to repurchase transactions. In transactions where the
group neither retains nor transfers substantially all the risks
and rewards of ownership of a financial asset, the asset is
derecognised if control over the asset is lost. The rights and
obligations retained in the transfer are recognised separately
as assets and liabilities as appropriate.
In transfers where control over the asset is retained, the
group continues to recognise the asset to the extent of its
continuing involvement, determined by the extent to which
it is exposed to changes in the value of the transferred asset.
Financial liabilities are derecognised when they are
extinguished, that is, when the obligation is discharged,
cancelled or expires.
Where an existing financial asset or liability is replaced by another
with the same counterparty on substantially different terms, or
the terms of an existing financial asset or liability are substantially
modified, such an exchange or modification is treated as a
derecognition of the original asset or liability and the recognition
of a new asset or liability, with the difference in the respective
carrying amounts being recognised in profit or loss.
Sale and repurchase agreements and lending of securities
Securities sold subject to linked repurchase agreements
(repurchase agreements) are reclassified in the statement of
financial position as pledged assets when the transferee has
the right by contract or custom to sell or repledge the collateral.
The liability to the counterparty is included under deposit and
current accounts or trading liabilities, as appropriate.
Securities purchased under agreements to resell (reverse
repurchase agreements), at either a fixed price or the
purchase price plus a lender’s rate of return, are recorded as
loans and included under trading assets or loans and advances,
as appropriate.
For repurchase and reverse repurchase agreements measured
at amortised cost, the difference between the purchase and
sales price is treated as interest and amortised over the life
using the effective interest method.
Securities lent to counterparties are retained in the annual
financial statements and are classified and measured in
accordance with the measurement policy of the group.
Securities borrowed are not recognised in the annual financial
statements unless sold to third parties. In these cases, the
obligation to return the securities borrowed is recorded at fair
value as a trading liability.
Income and expenses arising from the securities borrowing
and lending business are recognised over the period of the
transactions.
4.5 Interest in associates and joint ventures
Associates and joint ventures
Those entities in which the group has significant influence,
but not control, over the financial and operating policies are
classified as associates.
A joint venture is a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the net
assets of the arrangement. Joint control is the contractually
agreed sharing of control of an arrangement which only
exists when decisions about the relevant activities require
unanimous consent of the parties sharing control.
Interests in associates and joint ventures are accounted for
using the equity method and are measured in the consolidated
statement of financial position at an amount that reflects
the group’s share of the net assets of the associate or joint
venture (including goodwill).
Equity accounting involves recognising the investment initially
at fair value, including goodwill, and subsequently adjusting
the carrying value for the group’s share of the associates’ and
joint ventures income and expenses and OCI. Equity accounting
of losses in associates and joint ventures is restricted to the
interests in these entities, including unsecured receivables or
other commitments, unless the group has an obligation or has
made payments on behalf of the associate or joint ventures.
Unrealised intragroup profits are eliminated in determining
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the group’s share of equity accounted profits. Unrealised
losses are eliminated in the same way as unrealised gains, but
only to the extent that there is no evidence of impairment.
Equity accounting is applied from the date on which the entity
becomes an associate or joint venture up to the date on which
it ceases to be an associate or joint venture. The accounting
policies of associates and joint venture have been changed where
necessary to ensure consistency with the policies of the group.
Investments in associates and joint ventures are accounted
for at cost less impairment losses in the company’s annual
financial statements.
Jointly controlled operations
A joint operation is a joint arrangement whereby the joint
operators who have joint control have rights to the assets and
obligations for the liabilities relating to the arrangement. The
joint operator recognises:
Direct computer software development costs recognised as
intangible assets are amortised on the straight-line basis at
rates appropriate to the expected useful lives of the assets
(two to 10 years) from the date that the assets are available
for use, and are carried at cost less accumulated amortisation
and accumulated impairment losses. The carrying amount
of capitalised computer software is reviewed annually and is
written down when impaired.
Amortisation methods, useful lives and residual values are
reviewed at each financial year end and adjusted, if necessary.
There have been no changes in the estimated useful lives
from those applied in the previous financial year.
equipment are depreciated on the straight-line basis over the
estimated useful lives of the assets to their residual values.
Land is not depreciated. Leasehold buildings are depreciated
over the period of the lease or over a lesser period, as is
considered appropriate.
Any subsequent write-down in the value of the acquired
properties is recognised as an operating expense. Any
subsequent increases in the net realisable value, to the extent
that it does not exceed its original cost, are also recognised
within operating expenses.
The assets’ residual values, useful lives and the depreciation
method applied are reviewed, and adjusted if appropriate, at
each financial year end.
4.9 Capitalisation of borrowing costs
The estimated useful lives of tangible assets are typically as
follows:
Buildings – 25 years
4.10 Impairment of non-financial assets
Other intangible assets
The group recognises the costs incurred on internally
generated intangible assets such as brands, customer lists,
customer contracts and similar rights and assets, in profit or
loss as incurred.
Computer equipment – 3 to 5 years
The group capitalises brands, customer lists, customer
contracts, distribution forces and similar rights acquired in
business combinations.
Furniture and fittings – 4 years
Motor vehicles – 4 years
Office equipment – 6 years
assets it controls, including the assets jointly controlled;
liabilities including its share of liabilities incurred jointly;
revenue from the sale of its share of output and from the
sale of the output by a joint operation; and
expenses including the share of expenses incurred jointly.
4.6 Intangible assets
Computer software
Costs associated with developing or maintaining computer
software programmes and the acquisition of software
licences are generally recognised as an expense as incurred.
However, direct computer software development costs that
are clearly associated with an identifiable and unique system,
which will be controlled by the group and have a probable
future economic benefit beyond one year, are recognised as
intangible assets.
Capitalisation is further limited to development costs where
the group is able to demonstrate its intention and ability to
complete and use the software, the technical feasibility of the
development, the availability of resources to complete the
development, how the development will generate probable
future economic benefits and the ability to reliably measure
costs relating to the development. Direct costs include
software development employee costs and an appropriate
portion of relevant overheads.
Expenditure subsequently incurred on computer software
is capitalised only when it increases the future economic
benefits embodied in the specific asset to which it relates.
Borrowing costs that relate to qualifying assets, that is, assets
that necessarily take a substantial period of time to get ready
for their intended use or sale and which are not measured
at fair value, are capitalised. All other borrowing costs are
recognised in profit or loss.
Capitalised intangible assets are measured at cost less
accumulated amortisation and accumulated impairment losses.
Amortisation is recognised in profit or loss on a straight-line
basis over the estimated useful lives of intangible assets, not
exceeding 20 years, from the date that they are available for use.
Amortisation methods, useful lives and residual values are
reviewed at each financial yearend and adjusted, if necessary.
There have been no changes in the estimated useful lives
from those applied in the previous financial year.
Capitalised leased assets/branch refurbishment cost premises
– over the shorter of the lease term or useful life of underlying
asset.
There has been no change to the estimated useful lives from
those applied in the previous financial year.
Items of property and equipment are derecognised on
disposal or when no future economic benefits are expected
from their use or disposal. The gain or loss on derecognition is
recognised in profit or loss and is determined as the difference
between the net disposal proceeds and the carrying amount
of the item.
4.7 Property and equipment
4.8 Property developments and properties in possession
Equipment and owner-occupied properties Equipment,
furniture, vehicles and other tangible assets are measured
at cost less accumulated depreciation and accumulated
impairment losses
Costs that are subsequently incurred are included in the asset’s
related carrying amount or are recognised as a separate asset,
as appropriate, only when it is probable that future economic
benefits will flow to the group and the cost of the item can be
measured reliably. Expenditure, which does not meet these
criteria, is recognised in profit or loss as incurred. Depreciation,
impairment losses and gains and losses on disposal of assets
are included in profit or loss.
Owner-occupied properties are held for use in the supply
of services or for administrative purposes. Property and
Property developments are stated at the lower of cost or net
realisable value. Cost is assigned by specific identification
and includes the cost of acquisition and where applicable,
development and borrowing costs during development. When
development is completed borrowing costs and other charges
are expensed as incurred.
Properties in possession are properties acquired by the group
which were previously held as collateral for underlying lending
arrangements that, subsequent to origination, have defaulted.
The property is recognised at the time at which the risks and
rewards of the properties are transferred to the group. The
properties are initially recognised at cost and are subsequently
measured at the lower of cost and its net realisable value.
Intangible assets that have an indefinite useful life and
goodwill are tested annually for impairment and additionally
when an indicator of impairment exists. Intangible assets that
are subject to amortisation and other non-financial assets are
reviewed for impairment at each reporting date and tested
for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised in profit or loss for the amount
by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use. Fair value less costs to
sell is determined by ascertaining the current market value of
an asset and deducting any costs related to the realisation of
the asset. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. For
the purposes of assessing impairment, assets that cannot be
tested individually are grouped at the lowest levels for which
there are separately identifiable cash inflows from continuing
use (cash-generating units). Impairment losses recognised in
respect of cash-generating units are allocated first to reduce
the carrying amount of any goodwill allocated to the units,
and then to reduce the carrying amounts of the other assets
in the unit on a pro rata basis.
An impairment loss in respect of goodwill is not reversed.
In respect of other non-financial assets, impairment losses
recognised in prior periods are assessed at each reporting
date for any indications that the loss has decreased or no
longer exists. An impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed through profit or loss
only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had
been recognised.
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4.11 Leases
A lease is an agreement whereby the lessor conveys to the
lessee in return for a payment or series of payments the right
to use an asset for an agreed period of time. A lease of assets
is either classified as a finance lease or operating lease. Lease
of assets under which the group transfers substantially all the
risks and rewards incidental to ownership of the assets are
classified as finance leases. Similarly leases of assets under
which the group retains a significant portion of the risks and
rewards of ownership are classified as operating leases.
Group as lessee
Leases, where the group assumes substantially all the risks
and rewards incidental to ownership, are classified as finance
leases. All other leases are classified as operating leases.
Finance leases are capitalised at the inception of the lease at
the lower of the fair value of the leased asset and the present
value of the minimum lease payments. Lease payments are
calculated using the interest rate implicit in the lease to
identify the finance cost, which is recognised in profit or
loss over the lease period, and the capital repayment, which
reduces the liability to the lessor.
Payments made under operating leases, net of any incentives
received from the lessor, are recognised in profit or loss on
a straight-line basis over the term of the lease. Contingent
rentals are expensed as they are incurred. When an operating
lease is terminated before the lease period has expired, any
payment required to be made to the lessor by way of penalty
is recognised as an expense in the period in which termination
takes place.
Group as lessor
Lease and instalment sale contracts are primarily financing
transactions in banking activities, with rentals and instalments
receivable, less unearned finance charges, being included in
loans and advances in the statement of financial position.
Finance charges earned are computed using the effective
interest method, which reflects a constant periodic rate of
return on the investment in the finance lease. Initial direct
costs and fees are capitalised to the value of the lease
receivable and accounted for over the lease term as an
adjustment to the effective rate of return. The tax benefits
arising from investment allowances on assets leased to clients
are accounted for in the direct taxation line.
Operating lease income from properties held as investment
properties, net of any incentives given to lessees, is recognised
on the straight-line basis or a more representative basis where
applicable over the lease term. When an operating lease is
terminated before the lease period has expired, any payment
required by the group by way of a penalty is recognised as
income in the period in which termination takes place.
4.12 Provisions, contingent assets and contingent liabilities
Provisions are recognised when the group has a present legal
or constructive obligation as a result of past events, it is
probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate of the amount of the obligation can be made.
Provisions are determined by discounting the expected future
cash flows using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the liability.
A provision for restructuring is recognised when the group has
approved a detailed formal plan, and the restructuring either
has commenced or has been announced publicly. Future
operating costs or losses are not provided for.
A provision for onerous contracts is recognised when the
expected benefits to be derived by the group from a contract
are lower than the unavoidable cost of meeting its obligations
under the contract. The provision is measured at the present
value of the lower of the expected cost of terminating the
contract and the expected net cost of continuing with the
contract. Before a provision is established, the group recognises
any impairment loss on the assets associated with that contract.
Contingent assets are not recognised in the annual financial
statements but are disclosed when, as a result of past events,
it is probable that economic benefits will flow to the group,
but this will only be confirmed by the occurrence or nonoccurrence of one or more uncertain future events which are
not wholly within the group’s control.
Contingent liabilities include certain guarantees, other than
financial guarantees, and letters of credit. Contingent liabilities
are not recognised in the annual financial statements but are
disclosed in the notes to the annual financial statements
unless they are remote.
4.13 Employee benefits
Post-employment benefits
Defined contribution plans
The group operates a defined contribution plan, based on a
percentage of pensionable earnings funded by both employer
companies and employees, the assets of which are generally
held in separate trustee-administered funds.
Contributions to these plans are recognised as an expense in
profit or loss in the periods during which services are rendered
by employees.
Termination benefits
Termination benefits are recognised as an expense when the
group is committed, without realistic possibility of withdrawal,
to a formal detailed plan to terminate employment before
the normal retirement date, or to provide termination
benefits as a result of an offer made to encourage voluntary
redundancy. Termination benefits for voluntary redundancies
are recognised as an expense if the group has made an offer
encouraging voluntary redundancy, it is probable that the
offer will be accepted, and the number of acceptances can be
estimated reliably
Short-term benefits
Short-term benefits consist of salaries, accumulated leave
payments, profit share, bonuses and any non-monetary
benefits such as medical aid contributions.
Short-term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided.
A liability is recognised for the amount expected to be paid
under short-term cash bonus plans or accumulated leave if the
group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee
and the obligation can be estimated reliably.
4.14 Tax
Direct tax
Direct taxation includes all domestic and foreign taxes
based on taxable profits and capital gains tax. Current tax
is determined for current period transactions and events
and deferred tax is determined for future tax consequences.
Current tax and deferred tax are recognised in profit or loss
except to the extent that it relates to a business combination
(relating to a measurement period adjustment where the
carrying amount of the goodwill is greater than zero), or items
recognised directly in equity or in OCI.
Current tax represents the expected tax payable on taxable
income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustments to tax
payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences
arising between the tax bases of assets and liabilities and their
carrying values for financial reporting purposes. Deferred tax
is measured at the tax rates that are expected to be applied
to the temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted
at the reporting date. Deferred tax is not recognised for the
following temporary differences:
the initial recognition of goodwill
the initial recognition of assets and liabilities in a
transaction that is not a business combination, which
affects neither accounting nor taxable profits or losses
investments in subsidiaries and jointly controlled entities
(excluding mutual funds) where the group controls the
timing of the reversal of temporary differences and it is
probable that these differences will not reverse in the
foreseeable future.
he amount of deferred tax provided is based on the expected
T
manner of realisation or settlement of the carrying amount of
the asset or liability and is not discounted.
Deferred tax assets are recognised to the extent that it is
probable that future taxable income will be available against
which the unused tax losses can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax
benefit will be realised.
Current and deferred tax assets and liabilities are offset if there
is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same
tax authority on the same taxable entity, or on different tax
entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be
realised simultaneously.
Indirect tax
Indirect taxes, including non-recoverable VAT, skills
development levies and other duties for banking activities,
are recognised in profit or loss and disclosed separately in the
income statement.
4.15 Non-current assets held for sale and disposal groups
Non-current assets, or disposal groups comprising assets and
liabilities that are expected to be recovered primarily through
sale rather than continuing use, are classified as held for sale
Non-current assets held as investments for the benefit of
policyholders as part of the group’s investment management
and life insurance activities are not classified as held for sale
as ongoing investment management implies regular purchases
and sales in the ordinary course of business.
Immediately before classification as held for sale, the assets
(or components of a disposal group) are remeasured in
accordance with the group’s accounting policies and tested
for impairment (refer accounting policy 4.10 – Impairment of
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non-financial assets). Thereafter, the assets are measured at
the lower of their carrying amount and fair value less costs
to sell. Impairment losses on initial classification as held for
sale and subsequent gains and losses on remeasurement are
recognised in profit or loss.
Assets (or components of a disposal group) are presented
separately in the statement of financial position.
Property and equipment and intangible assets once classified
as held for sale, are not depreciated or amortised.
Once an interest in an associate or joint venture is classified as
held for sale, equity accounting is suspended.
The group classifies a component of the business as a
discontinued operation when that component has been
disposed of, or is classified as held for sale, and:
represents a separate major line of business or geographical
area of operations;
is part of a single coordinated plan to dispose of a separate
major line of business or geographical area of operations;
or
is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are presented separately within the
income statement and the cash flow statement.
4.16 Fair value
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction in the
principal (or most advantageous) market between market
participants at the measurement date under current market
conditions.
When a price for an identical asset or liability is not observable,
fair value is measured using another valuation technique that
maximises the use of relevant observable inputs and minimises
the use of unobservable inputs.
In estimating the fair value of an asset or a liability, the group
takes into account the characteristics of the asset or liability
that market participants would take into account when pricing
the asset or liability at measurement date.
For financial instruments, where the fair value of the financial
instrument differs to the transaction price, the difference is
commonly referred to as day one profit or loss. Day one profit
or loss is recognised in profit or loss immediately where the
fair value of the financial instrument is either evidenced by
comparison with other observable current market transactions
in the same instrument, or is determined using valuation
models with only observable market data as inputs.
reliably determined, those instruments are measured at cost
less impairment losses. Impairment losses on these financial
assets are not reversed.
earnings through an equity transfer. On exercise of equitysettled share options, proceeds received are credited to share
capital and premium.
Day one profit or loss is deferred where the fair value of the
financial instrument is not able to be evidenced by comparison
with other observable current market transactions in the same
instrument, or determined using valuation models that utilise
non-observable market data as inputs.
Fair value measurements are categorised into level 1, 2 or
3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the
inputs to the fair value measurement.
Share-based payments settled in cash are accounted for as
liabilities at fair value until settled. The liability is recognised
over the vesting period and is revalued at every reporting date
and on settlement. Any changes in the liability are recognised
in profit or loss.
4.17 Equity
Subsequent to initial recognition, fair value is measured
based on quoted market prices or dealer price quotations
for the assets and liabilities that are traded in active markets
and where those quoted prices represent fair value at the
measurement date. If the market for an asset or liability is not
active or the instrument is unlisted, the fair value is determined
using other applicable valuation techniques. These include
the use of recent arm’s length transactions, discounted cash
flow analyses, pricing models and other valuation techniques
commonly used by market participants.
Where discounted cash flow analyses are used, estimated
future cash flows are based on management’s best estimates
and a market related discount rate at the reporting date for an
asset or liability with similar terms and conditions.
If an asset or a liability measured at fair value has both a bid
and an ask price, the price within the bid-ask spread that is
most representative of fair value is used to measure fair value.
The group has elected the portfolio exception to measure the
fair value of certain groups of financial assets and financial
liabilities. This exception permits the group of financial assets
and financial liabilities to be measured at fair value on a net
basis. This election is applied where the group:
manages the group of financial assets and financial
liabilities on the basis of the group’s net exposure to a
particular market risk (or risks) or to the credit risk of a
particular counterparty in accordance with the group’s
documented risk management or investment strategy;
provides information on that basis about the group of
financial assets and financial liabilities to the group’s key
management personnel; and
is required to or has elected to measure those financial
assets and financial liabilities at fair value at the end of
each reporting period.
Where the fair value of investments in equity instruments or
identical instruments do not have a quoted price in an active
market, and derivatives that are linked to and must be settled
by delivery of such equity instruments, are unable to be
4.19 Revenue and expenditure
Share issue costs
Incremental external costs directly attributable to a transaction
that increases or decreases equity are deducted from equity,
net of related tax. All other share issue costs are expensed.
Distributions on ordinary shares
Distributions are recognised in equity in the period in which
they are declared. Distributions declared after the reporting
date are disclosed in the notes to the financial statements.
Reacquired equity instruments
Where subsidiaries purchase/(short) the holding entity’s
equity instruments, the consideration paid/(received) is
deducted/(added) from/(to) equity attributable to ordinary
shareholders as treasury shares on consolidation.
Fair value changes recognised by subsidiaries on these
instruments are reversed on consolidation and dividends
received are eliminated against dividends paid. Where such
shares are subsequently sold or reissued/(reacquired) outside
the group, any consideration received/(paid) is included in
equity attributable to ordinary shareholders.
4.18 Equity-linked transactions
Equity compensation plans
The group operates cash
compensation plans.
and
equity
share-based
The fair value of equity-settled share options is determined
on the grant date and accounted for as staff costs over the
vesting period of the share options, with a corresponding
increase in the share-based payment reserve. Non-market
vesting conditions, such as the resignation of employees and
retrenchment of staff, are not considered in the valuation
but are included in the estimate of the number of options
expected to vest. At each reporting date, the estimate of
the number of options expected to vest is reassessed and
adjusted against profit or loss and equity over the remaining
vesting period.
On vesting of share options, amounts previously credited to
the share-based payment reserve are transferred to retained
Banking activities
Revenue is derived substantially from the business of banking
and related activities and comprises interest income, fee and
commission revenue, trading revenue and other non-interest
revenue.
Net interest income
Interest income and expense (with the exception of those
borrowing costs that are capitalised – refer to accounting
policy 4.7 – Capitalisation of borrowing costs) are recognised
in profit or loss on an accrual basis using the effective interest
method for all interest-bearing financial instruments, except
for those classified at fair value through profit or loss. In terms
of the effective interest method, interest is recognised at a
rate that exactly discounts estimated future cash payments or
receipts through the expected life of the financial instrument
or, where appropriate, a shorter period, to the net carrying
amount of the financial asset or financial liability.
Direct incremental transaction costs incurred and origination
fees received, including loan commitment fees, as a result of
bringing margin-yielding assets or liabilities into the statement
of financial position, are capitalised to the carrying amount of
financial instruments that are not at fair value through profit
or loss and amortised as interest income or expense over the
life of the asset or liability as part of the effective interest rate.
Where the estimates of payments or receipts on financial
assets (except those that have been reclassified – refer to
accounting policy 3.4 – Financial instruments) or financial
liabilities are subsequently revised, the carrying amount of
the financial asset or financial liability is adjusted to reflect
actual and revised estimated cash flows.
The carrying amount is calculated by computing the present
value of the estimated cash flows at the financial asset
or financial liability’s original effective interest rate. Any
adjustment to the carrying value is recognised in net interest
income.
Where financial assets have been impaired, interest income
continues to be recognised on the carrying value of the
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impaired financial asset, based on the original effective
interest rate.
Fair value gains and losses on realised debt financial instruments,
including amounts removed from OCI in respect of availablefor-sale debt financial assets, and excluding those classified as
held-for-trading, are included in net interest income.
Dividends received on redeemable preference share
investments form part of the group’s lending activities and
are included in interest income.
Fee and commission revenue, including transactional fees,
account servicing fees, investment management fees, sales
commissions and placement fees are recognised as the
related services are performed. Loan commitment fees for
loans that are not expected to be drawn down are recognised
on a straight-line basis over the commitment period. Loan
syndication fees, where the group does not participate in
the syndication or participates at the same effective interest
rate for comparable risk as other participants, are recognised
as revenue when the syndication has been completed.
Syndication fees that do not meet these criteria are capitalised
as origination fees and amortised as interest income.
Gains and losses on equity available-for-sale financial assets
are reclassified from OCI to profit or loss on derecognition
or impairment of the investments. Dividends on these
instruments are recognised in profit or loss.
Dividend income
Dividends are recognised in profit or loss when the right
to receipt is established. Scrip dividends are recognised as
dividends received where the dividend declaration allows for
a cash alternative.
Management fees on assets under management
Fee income includes management fees on assets under
management and administration fees. Management fees on
assets under management are recognised over the period
for which the services are rendered, in accordance with the
substance of the relevant agreements.
An operating segment is a component of the group engaged
in business activities, whose operating results are reviewed
regularly by management in order to make decisions about
resources to be allocated to segments and assessing segment
performance. The group’s identification of segments and
the measurement of segment results is based on the group’s
internal reporting to management.
Transactions between segments are priced at market-related
rates.
Fee and commission expense included in net fee and
commission revenue are mainly transaction and service fees
relating to financial instruments, which are expensed as the
services are received.
4.21 Earnings per share
Trading revenue
Trading revenue comprises all gains and losses from changes
in the fair value of trading assets and liabilities, together with
related interest income, expense and dividends.
Other revenue
Other revenue includes gains and losses on equity instruments
designated at fair value through profit or loss, dividends
relating to those financial instruments, underwriting profit
from the group’s short-term insurance operations and related
insurance activities and remeasurement gains and losses from
contingent consideration on disposal and purchases.
4.23 Comparative figures
Where necessary, comparative figures within notes have been restated to conform to changes in presentation in the
current year.
4.24 New standards and interpretations not yet adopted
The following new or revised standards and amendments which have a potential impact on the group are not yet effective for
the year ended 31 December 2013 and have not been applied in preparing these financial statements. The group is currently
assessing the impact of the new or revised standards and amendments.
4.20 Segment reporting
The fair value of issued financial guarantee contracts on initial
recognition is amortised as income over the term of the contract.
Expenditure is recognised as fee and commission expenses
where the expenditure is linked to the production of fee and
commission revenue.
These assets and the income arising directly thereon are excluded from these financial statements as they are not assets of
the group. However, fee income earned and fee expenses incurred by the group relating to the group’s responsibilities from
fiduciary activities are recognised in profit or loss.
The group presents basic and diluted earnings per share (EPS)
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss that is attributable to ordinary shareholders
of the company by the weighted average number of ordinary
shares outstanding during the period.
Pronouncement
Title
Effective date
IFRS 9 (amended)
Financial Instruments
Annual periods beginning on or after
1 January 2018
IFRS 9 will replace the existing standard on the recognition
and measurement of financial instruments and requires all
financial assets to be classified and measured on the basis
of the entity’s business model for managing the financial
assets and the contractual cash flow characteristics of the
financial assets.
The accounting for financial assets differs in various
other areas to existing requirements such as embedded
derivatives and the recognition of fair value adjustments in
other comprehensive income.
All changes in the fair value of financial liabilities that are
designated at fair value through profit or loss due to changes
in own credit risk will be required to be recognised within
other comprehensive income.
IAS 32 (amendments) Offsetting Financial Assets and Financial Liabilities
Diluted EPS is determined by adjusting the profit or loss that
is attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding for the effects
of all dilutive potential ordinary shares, which comprise share
options granted to employees.
4.22 Fiduciary activities
The group commonly engages in trust or other fiduciary
activities that result in the holding or placing of assets on
behalf of individuals, trusts, post-employment benefit plans
and other institutions.
The amendments to IAS 32 clarify the requirements for
offsetting of financial assets and liabilities.
1 January 2014
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Pronouncement
Title
Effective date
Amendments to
IFRS 10, IFRS 12 and
IAS 27 – Investment
entities
IFRS 10 Consolidated Financial Statements
IFRS 12 Disclosure of Interests in Other Entities
IAS 27 Separate Financial Statements
1 January 2014
The amendments provide ‘investment entities’ (as defined)
an exemption from the consolidation of particular subsidiaries
and instead require that an investment entity measure
the investment in each eligible subsidiary at fair value
through profit or loss in accordance with IFRS 9 Financial
Instruments or IAS 39 Financial Instruments: Recognition
and Measurement.
If an obligation is triggered on reaching a minimum
threshold, the liability is recognised when that minimum
threshold is reached.
1 January 2014
Amendments reduce the circumstances in which the
recoverable amount of assets or cash-generating units is
required to be disclosed, clarify the disclosures required,
and introduce an explicit requirement to disclose the
discount rate used in determining impairment (or reversals)
where recoverable amount (based on fair value less costs
of disposal) is determined using a present value technique.
These amendments make it clear that there is no need to
discontinue hedge accounting if a hedging derivative is
novated, provided certain criteria are met.
A novation indicates an event where the original parties to
a derivative agree that one or more clearing counterparties
replace their original counterparty to become the new
counterparty to each of the parties. In order to apply the
amendments and continue hedge accounting, novation to a
central counterparty (CCP) must happen as a consequence of
laws or regulations or the introduction of laws or regulations.
IFRIC 21 provides guidance on when to recognise a liability
for a levy imposed by a government, both for levies that
are accounted for in accordance with IAS 37 Provisions,
Contingent Liabilities and Contingent Assets and those
where the timing and amount of the levy is certain.
The liability is recognised progressively if the obligating
event occurs over a period of time
Further, an investment entity will be required to account for
its investment in a relevant subsidiary in the same way in its
consolidated and separate financial statements (or to only
provide separate financial statements if all subsidiaries are
unconsolidated).
IAS 39 (amendments) Financial Instruments: Recognition and Measurement
Levies
The Interpretation identifies the obligating event for
the recognition of a liability as the activity that triggers
the payment of the levy in accordance with the relevant
legislation. It provides the following guidance on recognition
of a liability to pay levies:
The amendments also require additional disclosure about
why the entity is considered an investment entity, details
of the entity’s unconsolidated subsidiaries, and the nature
of relationship and certain transactions between the
investment entity and its subsidiaries.
IAS 36 (amendments) Impairment of Assets
IFRIC 21
1 January 2014
1 January 2014
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5. Segment reporting
The group is organised on the basis of products and services, and the segments have been identified on this basis. The principal
business units in the group are as follows:
Business unit
Banking and other financial services to individual customers and small-to-mediumsized enterprises.
Mortgage lending – Provides residential accommodation loans to mainly personal
market customers.
Instalment sale and finance leases – Provides instalments finance to personal
market customers and finance of vehicles and equipment in the business market.
Card products – Provides credit and debit card facilities for individuals and
businesses.
Transactional and lending products – Transactions in products associated with the
various points of contact channels such as ATMs, internet, telephone banking
and branches. This includes deposit taking activities, electronic banking, cheque
accounts and other lending products coupled with debit card facilities to both
personal and business market customers.
Corporate and investment banking services to larger corporates, financial
institutions and international counterparties.
Global markets – Includes foreign exchange, fixed income, interest rates, and
equity trading. Transaction process and services - includes transactional banking
and investors services.
Transactional and lending products – Includes corporate lending and transactional
banking businesses, custodial services, trade finance business and propertyrelated lending.
Investment banking – Include project finance, structured finance, equity
investments, advisory, corporate lending, primary market acquisition, leverage
finance and structured trade finance.
Wealth
The wealth group is made up of the company's subsidiaries, whose activities involve
investment management, portfolio management, unit trust/funds management,
and trusteeship.
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5. Segment reporting (continued)
Banking
Corporate and Investment
Banking
Wealth
Eliminations
Group
2013
Nmillion
2012
Nmillion
2013
Nmillion
2012
Nmillion
2013
Nmillion
2012
Nmillion
2013
Nmillion
2012
Nmillion
2013
Nmillion
Nmillion
Gross earnings
34,391
29,257
59,058
49,836
18,660
14,052
(883)
(1,285)
111,226
91,860
Net interest income
18,442
18,374
16,623
13,496
1,948
1,684
-
-
37,013
33,554
Interest income
27,124
24,030
33,668
32,659
1,948
1,684
(155)
(555)
62,585
57,818
Interest expense
(8,682)
(5,656)
(17,045)
(19,163)
-
-
155
555
(25,572)
(24,264)
6,909
5,154
25,326
17,064
16,712
12,368
(728)
(730)
48,219
33,856
6,769
5,141
10,147
8,813
16,712
12,344
(728)
(730)
32,900
25,568
7,127
5,214
10,211
8,926
16,712
12,344
(728)
(730)
33,322
25,754
(358)
(73)
(64)
(113)
-
-
-
-
(422)
(186)
-
-
14,895
8,091
-
-
-
-
14,895
8,091
140
13
284
160
-
24
-
-
424
197
Total income
25,351
23,528
41,949
30,560
18,660
14,052
(728)
(730)
85,232
67,410
(2,344)
(3,566)
(323)
(3,329)
-
-
-
-
(2,667)
(6,895)
23,007
19,962
41,626
27,231
18,660
14,052
(728)
(730)
82,565
60,515
(30,703)
(25,258)
(21,572)
(17,994)
(6,401)
(6,581)
728
730
(57,948)
(49,103)
Staff costs
(13,366)
(12,685)
(7,586)
(4,791)
(2,899)
(2,477)
-
-
(23,851)
(19,953)
(17,337)
(12,573)
(13,986)
(13,203)
(3,502)
(4,104)
728
730
(34,097)
(29,150)
(7,531)
(5,232)
20,112
9,487
12,259
7,471
-
-
24,840
11,726
Operating segments
Trading revenue
Other revenue
Operating expenses
Net income before indirect taxation
Indirect taxation
2012
(165)
(64)
(58)
(250)
-
-
-
-
(223)
(314)
(7,696)
(5,296)
20,054
9,237
12,259
7,471
-
-
24,617
11,412
1,689
2,286
(1,660)
(1,646)
(3,873)
(1,895)
-
-
(3,844)
(1,255)
(6,007)
(3,010)
18,394
7,591
8,386
5,576
-
-
20,773
10,157
Total assets
284,810
257,191
459,605
408,024
22,572
17,031
(3,941)
(5,427)
763,046
676,819
Total liabilities
272,001
230,536
389,426
360,105
7,926
5,954
(3,941)
(5,427)
665,412
591,168
Profit before direct taxation
Direct taxation
Profit/ (loss) for the year
Depreciation and amortisation
3,259
2,858
635
380
159
172
-
-
4,053
3,410
Number of employees
1,346
1,433
395
384
336
336
-
-
2,077
2,153
174
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6. Key management assumptions
In preparing the financial statements, estimates and assumptions are made that could materially affect the reported amounts of
assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on factors
such as historical experience and current best estimates of uncertain future events that are believed to be reasonable under the
circumstances. No material changes to assumptions have occurred during the period
Specific loan impairments
Non-performing loans include those loans for which the group has identified objective evidence of default, such as a breach
of a material loan covenant or condition as well as those loans for which instalments are due and unpaid for 90 days or more.
Management’s estimates of future cash flows on individually impaired loans are based on historical loss experience for assets with
similar credit risk characteristics. The methodology and assumptions used for estimating both the amount and timing of future
cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience. Recoveries of
individual loans as a percentage of the outstanding balances are estimated as follows:
6.1 Credit impairment losses on loans and advances
Portfolio loan impairments
The group assesses its loan portfolios for impairment at each reporting date. In determining whether an impairment loss should be
recorded in profit or loss, the group makes judgements as to whether there is observable data indicating a measurable decrease
in the estimated future cash flows from a portfolio of loans before the decrease can be allocated to an individual loan in that
portfolio. For corporate and investment banking, estimates are made of the duration between the occurrence of a loss event and
the identification of a loss on an individual basis. This is calculated on a portfolio basis, based on historical loss ratios, adjusted
for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with
defaults on the portfolio. These include early arrears and other indicators of potential default, such as changes in macroeconomic
conditions and legislation affecting credit recovery. These annual loss ratios are applied to loan balances in the portfolio and
scaled to the estimated loss emergence period. At the period end, the group applied the following loss emergence periods:
2013
Months
2012
%
Mortgage lending
2013
2012
Nmillion
Nmillion
43
48
12
12
33
40
3
8
6
6
29
50
7
7
Card debtors
8
8
9
9
1
-
Other lending
8
8
33
17
32
33
Corporate and Investment Banking The estimated recoveries for Corporate and Investment Banking non-performing loans are calculated on a customer by customer basis.
Sensitivity is based on the effect of a change of one percentage point in the value of the estimated recovery on the value of
the impairment.
Sensitivity
1
2012
2013
Months
2012
Months
2013
Nmillion
Nmillion
-
-
(15)
355
Mortgage lending
3
3
(2)
43
3
3
(1)
-
Card debtors
3
3
(1)
3
Other lending
3
3
(11)
309
12
12
238
155
Sensitivity is based on the effect of a change of one month in the emergence period on the value of the impairment.
1
2013
%
Impairment loss
sensitivity1
1
Average loss
emergence period
Corporate and Investment Banking (total loan portfolio)
2012
Months
For Personal and Business Banking, the estimates for the duration between the occurrence of a loss event and the identification
of a loss impairment for performing loans is calculated using portfolio loss given default and the probablility of default for the
arrears bucket and linked to the relevant emergence period.
Expected recoveries
as a percentage of
impaired loans
Expected time to
recovery
Determination of regulatory risk reserves
Provisions under prudential guidelines are determined using the time based provisioning regime prescribed by the Revised Central
Bank of Nigeria (CBN) Prudential Guidelines. This is at variance with the incurred loss model required by IFRS under IAS 39. As
a result of the differences in the methodology/provision regime, there will be variances in the impairments allowances required
under the two methodologies.
Paragraph 12.4 of the revised Prudential Guidelines for Deposit Money Banks in Nigeria stipulates that Banks would be required
to make provisions for loans as prescribed in the relevant IFRS Standards when IFRS is adopted. However, Banks would be
required to comply with the following:
Provisions for loans recognised in the profit and loss account should be determined based on the requirements of IFRS. However,
the IFRS provision should be compared with provisions determined under prudential guidelines and the expected impact/changes
in general reserves should be treated as follows:
Prudential Provisions is greater than IFRS provisions; the excess provision resulting should be transferred from the general
reserve account to a “regulatory risk reserve”.
Prudential Provisions is less than IFRS provisions; IFRS determined provision is charged to the statement of comprehensive
income. The cumulative balance in the regulatory risk reserve is thereafter reversed to the general reserve account.
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The non-distributable reserve should be classified under Tier 1 as part of the core capital.
The company’s subsidiary Stanbic IBTC Bank, has complied with the requirements of the guidelines as follows:
2013
2012
Nmillion
Nmillion
Specific provision on loans and advances
11,420
9,691
General provision on loans and advances
2,909
2,651
Statement of prudential adjustments
Note
Prudential provision
Provision for other credit losses
Provision on other losses
less accumulated amortisation and accumulated impairment
losses. The assets are tested for impairment whenever events
or changes in circumstances indicate that the carrying amount
may not be recoverable. The determination of the recoverable
amount of each asset requires judgement. The recoverable
amount is based on the value in use and calculated by
estimating future cash benefits that will result from each asset
and discounting these cash benefits at an appropriate pre-tax
discount rate.
-
1,607
6.6 Investment funds
3,653
4,472
17,982
18,421
The group acts as fund manager to a number of investment
funds. Determination of whether the group controls such an
investment fund usually focuses on the assessment of the
aggregate economic interest of the group in the fund and the
investors’ rights to remove the fund manager. For all funds
managed by the group, the investors are able to vote by
simple majority to remove the group as fund manager without
cause, and the group’s aggregate economic interest is in each
case less than 15%. As a result, the group has concluded that
it acts as agent for the investors in all cases, and therefore has
not consolidated these funds.
Further disclosure in respect of investment funds in which the
group has an interest is contained in note 14.
6.7 Other
The nature of the assumptions or other estimation uncertainty
for group share incentive schemes are disclosed in note 28.9.
IFRS provision
Specific impairment on loans and advances
12.3
8,972
9,287
Portfolio Impairment on loans and advances
12.3
4,587
3,842
3,654
5,292
17,213
18,421
769
-
-
-
769
-
Impairment and other losses
Closing regulatory reserve
Opening regulatory reserve
Appropriation: Transfer (to)/from retained earnings
6.2 Fair value of financial instruments
The fair value of financial instruments, such as unlisted
equity investments, that are not quoted in active markets is
determined using valuation techniques. Wherever possible,
models use only observable market data. Where required,
these models incorporate assumptions that are not supported
by prices from observable current market transactions in the
same instrument and are not based on available observable
market data. Such assumptions include risk premiums,
liquidity discount rates, credit risk, volatilities and correlations.
Changes in these assumptions could affect the reported fair
values of financial instruments.
Additional disclosures on fair value measurements of financial
instruments are set out in notes 25.
6.3 Impairment of available-for-sale equity investments
The group determines that available-for-sale equity investments
are impaired and recognised as such in profit or loss when there
has been a significant or prolonged decline in the fair value
below its cost. The determination of what is significant or
prolonged requires judgement. In making this judgement, the
group evaluates, among other factors, the normal volatility in
the fair value. In addition, impairment may be appropriate when
there is evidence of a deterioration in the financial health of the
investee, industry or sector, or operational and financing cash
flows or significant changes in technology.
Had the declines of financial instruments with fair values below
cost been considered significant or prolonged, the group
would have suffered an additional loss attributable to ordinary
shareholders of N98 million (2012: N38 million) in its financial
statements, being the transfer of the negative revaluations
within the available-for-sale reserve to profit or loss.
Group
7. Cash and cash equivalents
2012
2013
2012
Nmillion
Nmillion
Nmillion
Coins and bank notes
16,481
15,536
-
-
66,018
61,397
-
-
Current balances with banks within Nigeria
10,866
7,861
2,722
2,625
Current balances with banks outside Nigeria
26,947
21,886
-
-
120,312
106,680
2,722
2,625
Cash and balances with central bank include N51,603 million (2012: N40,520 million) that is not available for use by the group on
a day to day basis. These restricted balances comprise primarily reserving requirements held with Central Bank of Nigeria (CBN).
Included in current balances with banks outside Nigeria is N5.45 billion (2012: N8.99billion) which represents Naira value of
foreign currency bank balances held on behalf of customers in respect of letters of credit transactions. The corresponding liability
is included in other liabilities.
Group
8. Pledged assets and assets not derecognised
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
-
8,493
-
-
24,733
15,947
-
-
24,733
24,440
-
-
8.1 Pledged assets
Financial assets that may be repledged or resold by counterparties
Government bonds
Treasury bills
Maturity analysis
The maturities represent periods to contractual redemption of the pledged assets recorded.
6.5 Intangible assets
Redeemable on demand
Direct computer software development costs that are clearly
associated with an identifiable and unique system, which
will be controlled by the group and have a probable future
economic benefit beyond one year, are capitalised and
disclosed as computer software intangible assets.
Maturing within 1 month
Computer software intangible assets are carried at cost
2013
Nmillion
Balances with central bank
6.4 Securitisations and special purpose entities (SPEs)
The group sponsors the formation of SPEs primarily for the
purpose of allowing clients to hold investments, for asset
securitisation transactions, asset financing and for buying or
selling credit protection. The group consolidates SPEs that
it controls in terms of IFRS. As it can sometimes be difficult
to determine whether the group controls an SPE, it makes
judgements about its exposure to the risks and rewards, as
well as about its ability to make operational decisions for the
SPE in question. In arriving at judgements, these factors are
considered both jointly and separately.
Company
24,341
5,971
-
-
392
15,947
-
-
Maturing after 6 months but within 12 months
-
2,522
-
-
Maturing after 12 months
-
-
-
-
24,733
24,440
-
-
Maturing after 1 month but within 6 months
All pledged assets of the group are classified as available-for-sale financial instruments.
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9.1 Trading liabilities
8.2 Total assets pledged
The assets pledged by the group are strictly for the purpose of providing collateral to the counterparty for various transactions.
These transactions include assets pledged in connection with clearing/settlement activities of the group.
Classification
Listed
To the extent that the counterparty is permitted to sell and/or repledge the assets in the absence of default, the assets are
classified in the statement of financial position as pledged assets.
Unlisted
The carrying amount of total financial assets that have been pledged as collateral for liabilities (included in amounts reflected in
8.1 above) at 31 December 2013 was N2,955 million (2012: N2,905 million). The liability in respect of which the collateral has
been pledged relates to on-lending facility obtained from Bank of Industry as disclosed under note 20.
Comprising:
Government bonds (short positions)
Deposits
Treasury bills (short positions)
9. Trading assets and trading liabilities
Group
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
6,438
51,664
-
-
60,522
36,707
-
-
66,960
88,371
-
-
1,714
15,687
-
-
60,522
36,707
4,724
35,977
-
-
66,960
88,371
-
-
Trading assets and trading liabilities mainly relates to client-facilitating activities carried out by the Global Markets business.
These instruments are managed on a combined basis and should therefore be assessed on a total portfolio basis and not as
stand-alone assets and liability classes.
Maturity analysis
The maturity analysis is based on the remaining periods to contractual maturity from period end.
9.1 Trading assets
Repayable on demand
Group
Classification
Listed
Unlisted
Company
-
11,437
-
-
20,664
16,939
-
-
34,988
14,787
-
-
9,594
8,092
-
-
1,714
37,116
-
-
66,960
88,371
-
-
2013
Nmillion
2012
Nmillion
2013
Nmillion
2012
Nmillion
40,711
114,877
-
-
-
-
-
-
40 711
114,877
-
-
2,634
37,037
-
-
38,026
56,407
-
-
10. Derivative instruments
51
11
-
-
All derivatives are classified as either derivatives held for risk management or hedging purposes.
-
21,422
-
-
40,711
114,877
-
-
40,660
114,866
-
-
Comprising:
Government bonds
Treasury bills
Listed equities
Placements
Dated assets
Undated assets
51
11
-
-
40,711
114,877
-
-
Maturity analysis
The maturities represent periods to contractual redemption of the trading assets recorded.
-
11,172
-
-
35,069
41,043
-
-
3,031
10,917
-
-
863
14,418
-
-
1,697
37,316
-
-
51
11
-
-
40,711
114,877
-
-
Undated assets
In the normal course of business, the group enters into a variety of derivative transactions for both trading and risk management
purposes. Derivative financial instruments are entered into for trading purposes and for hedging foreign exchange and interest
rate exposures. Derivative instruments used by the group in both trading and hedging activities include swaps, forwards and
other similar types of instruments based on foreign exchange rates and interest rates.
The risks associated with derivative instruments are monitored in the same manner as for the underlying instruments. Risks are
also measured across the product range in order to take into account possible correlations.
10.1 Use and measurement of derivative instruments
Redemption value
Dated trading assets had a redemption value at 31 December 2013 of N41,398 million (2012: N118,709 million).
The fair value of all derivatives is recognised on the statement of financial position and is only netted to the extent that there
is both a legal right of set-off and an intention to settle on a net basis.
Swaps are transactions in which two parties exchange cash flows on a specified notional amount for a predetermined period.
The major types of swap transactions undertaken by the group are as follows:
(i) Foreign exchange swaps are contractual obligations between two parties to swap a pair of currencies. Foreign exchange
swaps are tailor-made agreements that are transacted between counterparties in the Over-the-counter (OTC) market.
(ii) Forwards are contractual obligations to buy or sell financial instruments or commodities on a future date at a specified price.
Forward contracts are tailor-made agreements that are transacted between counterparties in the OTC market.
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10.2 Derivatives held-for-trading
Maturity analysis
of net fair value
The group trades derivative instruments on behalf of customers and for its own positions. The group transacts derivative contracts
to address customer demand by structuring tailored derivatives for customers. The group also takes proprietary positions for its
own account. Trading derivative products include the following derivative instruments:
10.2.1 Foreign exchange derivatives
Within
1 year
Nmillion
After 1
year but
within
5 years
Nmillion
After
5 years
Nmillion
Net fair
value
Nmillion
Fair
value of
assets
Nmillion
Fair
value of
liabilities
Nmillion
Contract /
notional
amount
Nmillion
(348)
-
-
(348)
424
(772)
61,269
(348)
-
-
(348)
424
(772)
61,269
-
-
-
-
-
-
-
5
1,279
-
1,285
1,285
-
25,541
Forwards
-
-
-
-
-
-
-
Swaps
5
1,279
-
1,285
1,285
-
25,541
(343)
1,279
-
937
1,709
(772)
86,810
31 December 2012
Foreign exchange derivatives are primarily used to hedge foreign currency risks on behalf of customers and for the group’s own
positions. Foreign exchange derivatives primarily consist of foreign exchange forwards.
Derivatives held-for-trading
Foreign exchange derivatives
Forwards
10.2.2 Interest rate derivatives
Interest rate derivatives are primarily used to modify the volatility and interest rate characteristics of interest-earning assets and
interest-bearing liabilities on behalf of customers and for the group’s own positions. Interest rate derivatives primarily consist of swaps.
10.3 Unobservable valuation differences on initial recognition
Any difference between the fair value at initial recognition and the amount that would be determined at that date using a valuation
technique in a situation in which the valuation is dependent on unobservable parameters is not recognised in profit or loss immediately
but is recognised over the life of the instrument on an appropriate basis or when the instrument is redeemed.
Options
Interest rate derivatives
Total derivative assets/(liabilities)
10.4 Fair values
10.7 Unobservable valuation differences on initial recognition
The fair value of a derivative financial instrument represents for quoted instruments the quoted market price and for unquoted
instruments the present value of the positive or negative cash flows, which would have occurred if the rights and obligations
arising from that instrument were closed out in an orderly market place transaction at period end.
The table below sets out the aggregate difference yet to be recognised in profit or loss at the beginning and end of the year with
a reconciliation of the changes of the balance during the year for trading assets and liabilities.
10.5 Notional amount
The gross notional amount is the sum of the absolute value of all bought and sold contracts. The notional amounts have been
translated at the closing rate at the reporting date where cash flows are receivable in foreign currency. The amount cannot be
used to assess the market risk associated with the positions held and should be used only as a means of assessing the group’s
participation in derivative contracts.
Maturity analysis
of net fair value
31 December 2013
After 1
year but
Within within 5
years
1 year
Nmillion Nmillion
After 5
years
Nmillion
Fair
Net fair value of
value
assets
Nmillion Nmillion
Fair Contract
value of /notional
liabilities
amount
Nmillion
Nmillion
Derivatives held-for-trading
Foreign exchange derivatives
Forwards
Interest rate derivatives
Swaps
Total derivative assets/(liabilities)
(161)
(18)
-
(179)
422
(601)
10,691
(161)
(18)
-
(179)
422
(601)
10,691
(116)
736
-
620
1,104
(484)
102,093
(116)
736
-
620
1,104
(484)
102,093
(277)
718
-
441
1,526
(1,085)
112,784
2013
2012
Nmillion
Nmillion
277
780
-
-
Recognised in profit or loss during the year
(274)
(503)
Unrecognised profit at end of the year
3
277
Unrecognised profit at beginning of the year
Additional profit on new transactions
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11. Financial investments
12. Loans and advances
Group
Short - term negotiable securities
Listed
Unlisted
Other financial investments
Listed
Unlisted
12.1 Loans and advances net of impairments
Company
2013
Nmillion
2012
Nmillion
2013
Nmillion
2012
Nmillion
125,695
32,062
-
-
125,695
32,062
-
-
-
-
-
-
13,609
53,695
-
-
11,001
42,805
-
-
2,608
10,890
-
-
139,304
85,757
-
-
9,781
41,087
-
-
Medium term loans
Other term loans
Placements with banks
Gross loans and advances to customers
Mortgage loans
Instalment sale and finance leases (note 12.2)
Comprising:
Government bonds
Treasury Bills
Card debtors
Overdrafts and other demand loans
Group
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
94,180
24,571
-
-
94,180
24,571
-
-
289,747
266,344
-
-
303,306
279,473
-
-
8,667
10,571
-
-
27,012
29,972
-
-
850
494
-
-
32,676
29,193
-
-
232,635
206,668
-
-
1,466
2,575
-
-
(13,559)
(13,129)
-
-
125,695
32,062
-
-
Corporate bonds
1,867
2,453
-
-
Unlisted equities
741
706
-
-
(8,972)
(9,287)
-
-
1,220
1,717
-
-
(4,587)
(3,842)
-
-
-
7,732
-
-
139,304
85,757
-
-
383,927
290,915
-
-
397,486
304,044
-
-
Less: Credit impairments
(13,559)
(13,129)
-
-
383,927
290,915
-
-
Mutual funds and unit-linked investments
Placements
-
-
-
-
57,439
2,598
-
-
67,972
46,933
-
-
6,709
5,343
-
-
5,223
28,427
-
-
Undated investments 1
1,961
2,456
-
-
139,304
85,757
-
-
All financial investments of the group are classified as available for sale investments.
Aggregate unrealised loss of N0 million (2012: N68 million) was recognised in the available for sale reserve.
Comprising:
Maturity analysis
The maturities represent periods to contractual redemption of the financial investments recorded.
Credit impairments for loans and advances (note 12.3)
Loans to banks represent current account balances and placements with other banks mainly held for liquidity purposes and for
facilitating trade finance activities.
Included in current balances with banks outside Nigeria is N5.45 billion (2012: N8.99 billion) which represents Naira value
of foreign currency bank balances held on behalf of customers in respect of letters of credit transactions. The corresponding
liability is included in other liabities.
Regulatory prudential disclosures on loans and advances have been disclosed under note 6 and credit risk management–
prudential guidelines disclosures.
Maturity analysis
The maturity analysis is based on the remaining periods to contractual maturity from the period end.
1
Undated investments include unutilised equities and mutual funds and linked investments.
23,132
14,994
-
-
123,297
46,703
-
-
39,433
48,840
-
-
19,935
27,139
-
-
191,689
166,368
-
-
397,486
304,044
-
-
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12.1 Loans and advances net of impairments (continued)
Group
12.3 Credit impairments for loans and advances
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
Agriculture
12,703
10,361
-
-
Construction and real estate
15,294
5,921
-
-
Electricity
10,671
7,223
-
-
Segmental analysis - industry
A reconciliation of the allowance for impairment losses for loans and advances, by class:
Mortgage
lending
Nmillion
Instalment
sales and
finance
leases
Nmillion
Card
debtors
Nmillion
Other
loans and
advances
Nmillion
Commercial
property
finance
Nmillion
Total
107,197
41,476
-
-
Group
Individuals
55,853
46,026
-
-
31 December 2013
Manufacturing
55,741
67,629
-
-
Specific impairments
Mining
55,568
32,136
-
-
Balance at beginning of the year
730
778
27
4,026
3,726
9,287
(105)
1,062
43
2,049
(575)
2,474
Finance and other business services
Nmillion
Other services
48,016
48,591
-
-
Net impairments raised/(released)
Transport
11,318
10,992
-
-
Impaired accounts written off
(342)
(499)
-
(892)
(1,056)
(2,789)
Wholesale
25,125
33,689
-
-
Balance at end of the year
283
1,341
70
5,183
2,095
8,972
397,486
304,044
-
-
Segmental analysis – geographic area
17,157
12,163
-
-
South West
329,525
239,860
-
-
South East
4,682
3,147
-
-
North West
19,709
14,772
-
-
North Central
15,332
11,279
-
-
North East
1,924
824
-
-
Outside Nigeria
9,157
21,999
-
-
397,486
304,044
-
-
12.2 Installment sale and finance leases
Included in gross loans and advances to customers are finance lease as analysed below
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
33,632
39,145
-
-
2,728
3,043
-
-
30,898
35,790
-
-
6
312
-
-
Unearned finance charges deducted
(6,620)
(9,173)
-
-
Net investment in instalment sale and finance leases
27,012
29,972
-
-
2,582
2,462
-
-
24,427
27,328
-
-
3
182
-
-
Receivable within 1 year
Receivable after 1 year but within 5 years
Receivable after 5 years
Receivable within 1 year
Receivable after 1 year but within 5 years
Receivable after 5 years
All loans and advances to customers are held at amortised cost.
18
1,157
1,860
3,842
(15)
41
998
745
83
445
3
1,198
2,858
4,587
366
1,786
73
6,381
4,953
13,559
Mortgage
lending
Nmillion
Instalment
sales and
finance leases
Nmillion
Card
debtors
Nmillion
Other
loans and
advances
Nmillion
Commercial
property
finance
Nmillion
Nmillion
452
180
28
1,867
3,497
6,024
278
626
(1)
2,562
3,351
6,816
Impaired accounts written off
-
(28)
-
(403)
(3,122)
(3,553)
730
778
27
4,026
3,726
9,287
184
80
17
1,176
1,881
3,338
6
537
1
(19)
(21)
504
190
617
18
1,157
1,860
3,842
Total
920
1,395
45
5,183
5,586
13,129
Total
Group
Total
31 December 2012
Specific impairments
Company
Nmillion
Gross investment in instalment sale and finance leases
617
(172)
South South
Group
190
(107)
The following table sets out the distribution of the group’s loans and advances by geographic area where the loans are recorded.
Portfolio impairments
Portfolio impairments
186
187
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13. Equity investment in group companies
Group
2013
2012
2013
2012
%
Nmillion
Nmillion
Nmillion
Nmillion
Stanbic IBTC Ventures Limited ("SIVL")
100%
-
-
500
500
Stanbic IBTC Bank PLC
100%
-
-
63,467
63,467
100%
-
-
3,500
3,500
Stanbic IBTC Asset Management Limited ("SIAML")
100%
-
-
710
710
70.59%
-
-
565
565
The following table sets out the segment analysis of the group impairment by industry.
Group
Group
Agriculture
Construction and real estate
Electricity
Finance and other business services
Individuals
2013
Nmillion
2012
Nmillion
994
243
1,102
1,101
-
31
825
61
1,811
1,756
Manufacturing
970
2,187
Mining
302
234
Other services
995
806
Transport
330
976
1,643
1,892
8,972
9,287
Wholesale
Segmental analysis of specific impairments – geographic area
Stanbic IBTC Pension Managers Limited ("SIPML")
Stanbic IBTC Trustees Limited ("SITL")
100%
-
-
100
100
Stanbic IBTC Stockbrokers Limited ("SISL")
100%
-
-
109
109
-
-
68,951
68,951
13.1 List of significant subsidiaries
The table below provides details of the significant subsidiaries of the group.
Country of
incorporation
Nature of
business
Percentage of
capital held
Financial
year end
Stanbic IBTC Ventures Limited
("SIVL")
Nigeria
Undertakes venture
capital projects
99.99%
31 December
Stanbic IBTC Bank PLC
Nigeria
Provision of banking
and related financial
services
99.99%
31 December
Nigeria
Provision of general
corporate finance and
debt advisory services
99.99%
31 December
Stanbic IBTC Asset Management Limited
("SIAML")
Nigeria
Acting as investment
manager, portfolio
manager and as a
promoter and manager
of unit trusts and funds
99.99%
31 December
("SIPML")
Nigeria
Administration and
management of
pension fund assets
70.59%
31 December
Stanbic IBTC Trustees Limited
("SITL")
Nigeria
Acting as executors
and trustees of
wills and trusts and
provision of agency
services
99.99%
31 December
("SISL")
Nigeria
Provision of
stockbroking services
99.99%
31 December
Subsidiaries
The following table sets out the distribution of the group’s impairments by geographic area where the loans are recorded.
Group
2013
2012
Nmillion
Nmillion
927
256
7,289
8,250
South East
161
163
North West
197
117
North Central
366
483
32
18
8,972
9,287
Group
South South
South West
North East
Company
13.2 Significant restrictions
The group does not have significant restrictions on its ability to access or use its assets and settle its liabilities other than those
resulting from the regulatory frameworks within which the subsidiaries operate.
The regulatory frameworks require all the subsidiaries (except SIVL and SITL) to maintain certain level of regulatory capital. In
addition, the banking subsidiary (Stanbic IBTC Bank PLC) is required to keep certain levels of liquid assets, limit exposures to
other parts of the group and comply with other ratios.
For information on assets, liabilities and earnings of the subsidiaries, see Note 13.4.
188
189
Overview
13.3 Non-controlling interests (NCI) in subsidiaries
The following table summarises the information relating to the group subsidiary that has material NCI.
Group
2013
2012
Nmillion
Nmillion
NCI percentage
29.41%
29.41%
Total assets
18,060
13,335
Total liabilities
(6,648)
(5,474)
Net assets
11,412
7,861
3,356
2,310
15,739
11,747
Profit
7,356
4,630
Total comprehensive income
7,356
4,628
Profit allocated to NCI
2,163
1,289
Cash flows from operating activities
8,210
6,267
Cash flows from investing activities
(3,435)
(2,925)
Cash flow from financing activities, before dividends to NCI
(2,682)
(2,054)
Cash flow from financing activities - cash dividends to NCI
(1,118)
(856)
975
432
Carrying amount of NCI
Revenue
Net increase in cash and cash equivalents
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190
191
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13.4. Summarised financial statements of the consolidated entities
Stanbic IBTC
Holdings PLC
Company
Nmillion
Stanbic IBTC
Bank PLC
Nmillion
Stanbic IBTC
Capital Ltd
Nmillion
Stanbic IBTC
Pension Mgt Ltd
Nmillion
Stanbic IBTC
Asset Mgt Ltd
Nmillion
Stanbic IBTC
Ventures Ltd
Nmillion
Stanbic IBTC
Trustees Ltd
Nmillion
Stanbic IBTC
Stockbroking Ltd
Nmillion
Consolidations/
Eliminations
Nmillion
Stanbic IBTC
Holdings PLC
Group
Nmillion
Income statement
-
34,802
-
1,444
484
54
20
209
-
37,013
Non interest revenue
Net interest income
9,137
26,426
3,006
14,295
2,293
150
124
1,836
(9,048)
48,219
Total income
9,137
61,228
3,006
15,739
2,777
204
144
2,045
(9,048)
85,232
Staff costs
(456)
(19,218)
(996)
(2,194)
(630)
-
(76)
(281)
-
(23,851)
Operating expenses
(465)
(29,869)
(513)
(2,771)
(733)
(10)
(25)
(439)
728
(34,097)
-
(2,667)
-
-
-
-
-
-
-
(2,667)
Total expenses
(921)
(51,754)
(1,509)
(4,965)
(1,363)
(10)
(101)
(720)
728
(60,615)
Profit before tax
8,216
9,474
1,497
10,774
1,414
194
43
1,335
(8,320)
24,614
116
655
(290)
(3,418)
(413)
(31)
(15)
(448)
-
(3,844)
Profit for the year
8,332
10,129
1,207
7,356
1,001
163
28
877
(8,320)
20,773
At 31 December 2012
1,053
5,300
931
4,630
1,331
80
46
782
(3,996)
10,157
2,722
109,385
1,805
4,721
137
177
6
1,769
(410)
120,312
-
1,526
-
-
-
-
-
-
-
1,526
Tax
Assets
Cash and cash equivilents
Derivative assets
Trading assets
-
38,049
2,611
-
-
-
-
51
-
40,711
Pledged assets
-
24,733
-
-
-
-
-
-
-
24,733
-
123,457
-
10,583
3,146
2,171
217
2,000
(2,270)
139,304
-
94,180
-
-
-
-
-
-
-
94,180
-
289,747
-
-
-
-
-
-
-
289,747
118
7,441
95
1
37
-
-
24
-
7,716
68,951
-
-
-
-
-
-
-
(68,951)
-
Equity investment in group companies
Other assets
1,038
14,634
2,088
2,348
907
3
19
56
(1,264)
19,829
2,572
21,948
4
407
43
-
1
13
-
24,988
Total assets
75,401
725,100
6,603
18,060
4,270
2,351
243
3,913
(72,895)
763,046
At 31 December 2012
72,508
650,470
4,908
13,335
4,066
1,902
203
3,805
(74,378)
676,819
192
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13.4. Summarised financial statements of the consolidated entities (continued)
Stanbic IBTC
Holdings PLC
Company
Nmillion
Stanbic IBTC
Bank PLC
Nmillion
Stanbic IBTC
Capital Ltd
Nmillion
Stanbic IBTC
Pension Mgt Ltd
Nmillion
Stanbic IBTC
Asset Mgt Ltd
Nmillion
Stanbic IBTC
Ventures Ltd
Nmillion
Stanbic IBTC
Trustees Ltd
Nmillion
Stanbic IBTC
Stockbroking Ltd
Nmillion
Consolidations/
Eliminations
Nmillion
Stanbic IBTC
Holdings PLC
Group
Nmillion
-
1,085
-
-
-
-
-
-
-
1,085
Trading liabilities
-
66,960
-
-
-
-
-
-
-
66,960
Deposits from banks
-
51,686
-
-
-
-
-
-
-
51,686
-
419,032
-
-
-
-
-
-
(2,680)
416,352
Liabilities and equity
Other borrowings
-
48,764
-
-
-
-
-
-
-
48,764
Subordinated debt
-
6,399
-
-
-
-
-
-
-
6,399
2
2,724
395
3,492
424
279
14
458
-
7,788
3,553
57,870
570
3,156
756
14
84
1,919
(1,544)
66,378
Equity and reserves
71,846
70,580
5,638
11,412
3,090
2,058
145
1,536
(68,671)
97,634
Total liabilities and equity
75,401
725,100
6,603
18,060
4,270
2,351
243
3,913
(72,895)
763,046
At 31 December 2012
72,508
650,470
4,908
13,335
4,066
1,902
203
3,805
(74,378)
676,819
Cost-to-income ratio (%)
-
80.2
50.2
31.5
48.7
4.9
70.1
35.2
8.0
68
Total liabilities (Nmillion)
3,555
654,520
965
6,648
1,180
293
98
2,377
(4,224)
665,412
Other liabilities
194
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14. Involvement with unconsolidated structured entities
15. Other assets
The table below describes the types of structured entities that the group does not consolidate but in which it holds an interest.
Group
Type of structured entity
Nature and purpose
Interest held by the group
Investment funds
To generate fees from managing assets
on behalf of third party investors.
Investments in units issued by the funds
31 Dec
2013
Nmillion
31 Dec
2012
Nmillion
31 Dec
2013
Nmillion
31 Dec
2012
Nmillion
1,196
1,103
-
-
-
8,613
-
-
2,407
3,398
-
-
609
593
-
-
10,071
4,786
657
843
6,467
5,440
396
73
475
738
-
-
21,225
24,671
1,053
916
(1,396)
(1,900)
(15)
-
19,829
22,771
1,038
916
At start of year
1,900
1,067
-
-
Additions/(write back)
1,120
833
15
-
(1,624)
-
-
-
1,396
1,900
15
-
Trading settlement assets
Receivable from AMCON in respect of loans sold
Accrued income
These vehicles are financed through the Management fees
issue of units to investors.
Indirect/withholding tax receivables
Accounts receivable
Prepayments
Other debtors
The table below sets out an analysis of the investment funds managed by the group, their assets under management, and the
carrying amounts of interests held by the group in the investment funds. The maximum exposure to loss is the carrying amount
of the interest held by the group.
Asset under management
Interest held by the group
2013
Nmillion
2012
Nmillion
2013
Nmillion
2012
Nmillion
14,908
14,111
294
456
3,561
3,258
334
332
127
66
-
-
2,386
2,371
-
-
19,787
12,414
471
814
S/N
Group
i
Stanbic IBTC Nigerian Equity Fund
ii
Stanbic IBTC Ethical Fund
iii
Stanbic IBTC Iman Fund
iv
Stanbic IBTC Guaranteed Investment Fund
v
Stanbic IBTC Money Market Fund
vi
Stanbic IBTC Bond Fund
1,060
1,916
122
115
vii
Stanbic IBTC Balanced Fund
1,073
822
-
-
viii
Stanbic IBTC Aggressive Fund
614
324
-
-
ix
Stanbic IBTC Conservative Fund
680
546
-
-
x
Stanbic IBTC Absolute Fund
1,205
1,353
-
-
45,401
37,181
1,221
1,717
Total
Company
Impairment provision on doubtful receivable
Movement in provision for doubtful receivables
Amount written off
At end of year
16. Current and deferred tax assets
Group
Current tax assets
Deferred tax assets (note 22.1)
Company
31 Dec
2013
Nmillion
31 Dec
2012
Nmillion
31 Dec
2013
Nmillion
31 Dec
2012
Nmillion
62
43
-
-
7,654
5,169
118
-
7,716
5,212
118
-
The interest held by the group is presented under financial investments in the statement of financial position.
The directors have determined that based on company’s profit forecast, it is probable that there will be future taxable profits
against which the tax losses, from which a deferred tax asset has been recognised, can be utilised.
196
197
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17. Property and equipment
Group
Leasehold
land and
buildings
Nmillion
Motor
vehicles
Nmillion
Furniture,
fittings and Computer
equipment equipment
Nmillion
Nmillion
Work in
progress
Nmillion
Total
Nmillion
17.1 Cost
Leasehold
land and
buildings
Nmillion
Motor
vehicles
Nmillion
-
-
-
Company
Furniture,
fittings and Computer
equipment equipment
Nmillion
Nmillion
Work in
progress
Nmillion
Nmillion
-
16
16
Total
17.1 Cost
19,186
481
8,318
7,792
2,401
38,178
Additions
27
60
226
689
3,740
4,742
Additions
-
-
27
520
2,034
2,581
Disposals
(105)
(120)
(99)
(70)
(27)
(421)
Disposals
-
-
-
-
-
-
811
-
166
850
(1,827)
-
Transfers/reclassifications
-
-
5
1
(6)
-
19,919
421
8,611
9,261
4,287
42,499
-
-
32
521
2,044
2,597
18,867
643
8,083
5,472
2,337
35,402
-
-
-
-
-
-
Additions
89
26
172
706
1,187
2,180
Additions
-
-
-
-
16
16
Disposals
-
(198)
(191)
(287)
(95)
(771)
Disposals
-
-
-
-
-
-
230
10
254
1,901
(1,028)
1,367
Impairments
-
-
-
-
-
-
19,186
481
8,318
7,792
2,401
38,178
-
-
-
-
-
-
-
-
-
-
16
16
17.2 Accumulated depreciation
3,978
302
5,119
4,321
-
13,720
Charge for the year
1,167
73
1,456
1,357
-
4,053
-
-
-
-
-
-
(46)
(90)
(94)
(32)
-
(262)
Charge for the year
-
-
3
22
-
25
-
-
-
-
-
-
Disposals
-
-
-
-
-
-
5,099
285
6,481
5,646
-
17,511
-
-
-
-
-
-
-
-
3
22
-
25
3,304
289
3,776
3,309
-
10,678
654
105
1,507
1,144
-
3,410
-
(97)
(152)
(119)
-
(368)
Charge for the year
-
-
-
-
-
-
20
5
(12)
(13)
-
-
Disposals
-
-
-
-
-
-
3,978
302
5,119
4,321
-
13,720
Impairments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31 December 2013
-
-
29
499
2,044
2,572
31 December 2012
-
-
-
-
16
16
Disposals
Charge for the year
Disposals
Net book value:
31 December 2013
14,820
136
2,130
3,615
4,287
24,988
31 December 2012
15,208
179
3,199
3,471
2,401
24,458
There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (2012: Nil).
17.2 Accumulated depreciation
Net book value:
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c)Available for sale reserve
This represents unrealised gains or losses arising from changes in the fair value of available-for-sale financial assets which are
recognised directly in the available-for-sale reserve until the financial asset is derecognised or impaired.
18. Share capital and reserves
Group
2013
Nmillion
Company
2012
Nmillion
2013
Nmillion
2012
Nmillion
18.1 Authorised
20,000,000,000 Ordinary shares of 50k each
(Dec 2012: 20,000,000,000 Ordinary shares of 50k each)
10,000
10,000
10,000
Ordinary share premium
(i)
If the Prudential Provision is greater than IFRS provisions; transfer the difference from the general reserve to a nondistributable regulatory reserve (statutory credit reserve).
(ii)If the Prudential Provision is less than IFRS provisions; the excess charges resulting should be transferred from the
regulatory reserve account to the general reserve to the extent of the non-distributable reserve previously recognised.
10,000
18.2 Issued and fully paid-up
20,000,000,000 Ordinary shares of 50k each
(Dec 2012: 20,000,000,000 Ordinary shares of 50k each)
d) Statutory credit risk reserve
Should credit impairment on loans and advances as accounted for under IFRS using the incurred loss model differ from the
Prudential Guidelines set by the Central Bank of Nigeria the following adjustment is required.
5,000
5,000
5,000
5,000
65,450
65,450
65,450
65,450
All issued shares are fully paid up. Details of directors’ interest in shares, the shareholder spread and major shareholders are given
in the directors’ report on page ii of these financial statements.
e) Share based payment reserve
This represents obligations under the equity settled portion of the group’s share incentive scheme which enables key
management personnel and senior employees to benefit from the performance of Stanbic IBTC Holdings Plc and its
subsidiaries.
19. Deposit and current accounts
a)Merger reserve
Merger reserve arose as a result of the implementation of the holding company restructuring. It represents the difference
between pre-restructuring share premium/share capital and the post-restructuring share premium/share capital.
b)Other regulatory reserves
The other regulatory reserves includes statutory reserve and the small and medium scale industries reserve (SMEEIS) as
described below.
(i) Statutory reserves
Nigerian banking and pension industry regulations require Stanbic IBTC Bank PLC (“the bank”) and Stanbic IBTC Pension
Managers Ltd (“SIPML) that are subsidiary entities, to make an annual appropriation to a statutory reserve.
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
51,686
26,632
-
-
Deposits from banks
51,686
26,632
-
-
416,352
355,419
-
-
198,320
138,524
-
-
Call deposits
52,927
22,176
-
-
Savings accounts
19,097
15,116
-
-
130,940
167,101
-
-
Negotiable certificate of deposits
15,068
12,502
-
-
Total deposits and current accounts
468,038
382,051
-
-
Deposits from banks
18.3 Reserves
Group
Current accounts
Term deposits
Maturity analysis
The maturity analysis is based on the remaining periods to contractual maturity from year end.
As stipulated by S.16(1) of the Banks and Other Financial Institution Act of 1991 (amended), an appropriation of 30% of
profit after tax is made if the statutory reserve is less than paid-up share capital and 15% of profit after tax if the statutory
reserve is greater than the paid up share capital. The bank (a subsidiary) transferred 15% of its profit after tax to statutory
reserves as at period end.
Section 69 of Pension Reform Act, 2004 requires SIPML to transfer 12.5% of its profit after tax to a statutory reserve.
(ii)Small and medium scale industries reserve (SMEEIS)
The SMEEIS reserve is maintained to comply with the Central Bank of Nigeria (CBN) requirement that all licensed banks
set aside a portion of the profit after tax in a fund to be used to finance equity investment in qualifying small and medium
scale enterprises. Under the terms of the guideline (amended by CBN letter dated 11 July 2006), the contributions will
be 10% of profit after tax and shall continue after the first 5 years but banks’ contributions shall thereafter reduce to 5%
of profit after tax. However, this is no longer mandatory. The small and medium scale industries equity investment scheme
reserves are non-distributable.
Repayable on demand
310,915
203,215
-
-
87,923
111,695
-
-
56,952
50,320
-
-
12,209
16,789
-
-
39
32
-
-
468,038
382,051
-
-
200
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Segmental analysis - geographic area
Maturity analysis
The following table sets out the distribution of the group’s deposit and current accounts by geographic area.
The maturity analysis is based on the remaining periods to contractual maturity from period end.
2013
2012
Group
Group
%
Nmillion
%
Nmillion
South South
4
19,990
6
21,246
South West
70
329,755
75
286,795
South East
2
8,310
1
5,347
North West
3
14,666
3
13,326
11
49,306
7
26,741
North East
1
5,689
1
3,586
Outside Nigeria
9
40,322
7
25,010
100
468,038
100
382,051
North Central
Repayable on demand
Additions
Group
Company
Payments made
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
FMO – Netherland Development Finance Company
3,595
5,865
-
-
European Investment Bank
2,275
2,663
-
-
Bank of Industry
6,479
6,445
-
-
23,762
40,308
-
-
Standard Bank Isle of Man
CBN Commercial Agricultural Credit Scheme (CACS)
12,653
11,592
-
-
48,764
66,873
-
-
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
-
-
-
-
1,196
3,173
-
-
308
389
-
-
1,422
1,463
-
-
45,838
61,848
-
-
48,764
66,873
-
-
66,873
47,618
-
-
1,095
22,457
-
-
(19,204)
(3,202)
-
-
48,764
66,873
-
-
Movement in other borrowings
At start of period
20. Other borrowings
Company
At end of period
21. Subordinated debt
Standard Bank of South Africa
Group
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
6,399
-
-
-
6,399
-
-
-
The borrowings relate to on-lending facilities and all have been disbursed.
(i)The bank, a subsidiary company, obtained an on-lending dollar denominated loan of USD75 million from Netherland
Development Finance Company (FMO) which expires on 15 January 2015, and has a rate of 2.0% above 6 month’s LIBOR.
The facility is unsecured.
(ii) The bank also has a current dollar denominated facility from European Investment Bank which expires on 14 December 2018
and has a rate of 2.5% above 3 month’s LIBOR.
(iii)The bank obtained a Central Bank of Nigeria (CBN) initiated on-lending naira facility from Bank of Industry in September
2010 at a fixed rate of 1% per annum on a tenor based on agreement with individual beneficiary customer. Disbursement of
these funds are represented in loans and advances to customers.
(iv)The bank obtained dollar denominated long term on-lending facilities with floating rates tied to LIBOR from Standard Bank
Isle of Man with average tenor of 5 years.
(v)The bank obtained an interest free loan from the Central Bank of Nigeria (CBN) for the purpose of on - lending to customers
under the Commercial Agricultural Credit Scheme (CACS). The tenor is also based on agreement with individual beneficiary
customer. Disbursement of these funds are represented in loans and advances to customers. Based on the structure of the
facility, the bank assumes default risk of amount lent to its customers.
The bank, a subsidiary company, obtained an unsecured US dollar denominated term subordinated loan facility of USD40 million
from Standard Bank of South Africa on 31 May 2013. The facility expires on 31 May 2025 and is repayable at maturity. Interest
on the facility is payable semi-annually at LIBOR (London Interbank Offered Rate) plus 3.60%.
202
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22. Current and deferred tax liabilities
Current tax liabilities
Deferred tax liabilities
Group
23. Provisions and Other liabilities
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
7,532
4,686
2
-
256
158
-
-
7,788
4,844
2
-
Company
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
Trading settlement liabilities
1,197
1,070
-
-
Cash-settled share-based payment liability (note 28.9)
1,093
303
-
-
Accrued expenses – Staff
3,450
4,172
506
-
Deferred revenue liability
627
1,152
-
-
15,437
16,076
2,845
445
Collections/remmitance payable
9,669
5,256
-
-
Customer deposit for letters of credit
5,448
2,450
-
-
Liability on refinanced letters of credit
12,263
8,999
-
-
23.1 Summary
Accrued expenses – Others
Group
Group
2013
Nmillion
2012
Nmillion
2013
Nmillion
2012
Nmillion
1,376
1,154
-
-
Unclaimed balance
3,974
3,512
-
-
3,838
2,263
13
-
Provision for contigent losses (Note 23.2)
2,258
845
-
-
Fair-value adjustments on financial instruments
(268)
(173)
-
-
Draft and bank cheque payable
1,687
1,493
-
-
Unutilised losses
1,933
1,767
-
-
Sundry liabilities
9,275
2,929
202
560
519
-
105
66,378
48,257
3,553
1,005
Deferred tax closing balance
7,398
5,011
118
-
Deferred tax liabilities
(256)
(158)
-
-
Deferred tax assets (note 16)
7,654
5,169
118
-
7,398
5,011
118
-
Deferred tax at beginning of the year
5,011
2,563
-
-
Originating/(reversing) temporary differences for the year:
2,387
2,448
118
-
222
(282)
-
-
1,575
1,520
13
-
Fair-value adjustments on financial instruments
(95)
(557)
-
-
Unutilised losses
166
1,767
-
-
Others
519
-
105
7,398
5,011
118
-
4,686
5,112
-
-
2,846
(426)
-
-
6,326
3,685
-
-
59
(349)
-
-
(3,539)
(3,762)
-
-
7,532
4,686
-
-
22.1 Deferred tax analysis
Others
22.2 Deferred tax reconciliation
Deferred tax at end of the year
Charge for the year
Over/under provision - prior year
Payment made
Current tax liabilities at end of the year
The group makes provision for contingent losses at the reporting date. Estimates of provisions required are based on advice and
recommendation of legal counsel retained by the group. Movement on the provision balance is contained below.
Movement in provision for contigent losses
22.3 Current tax laibilities movement
Current tax liabilities at beginning of the year
23.2 Provision for contingent losses
845
586
-
-
Net provision made
1,413
259
-
-
2,258
845
-
-
204
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24. Classification of financial instruments
Accounting classifications and fair values
The table below sets out the group’s classification of assets and liabilities, and their fair values.
31 December 2013
Note
Held-for-trading
Nmillion
Designated at
fair value
Nmillion
Loans and
receivables
Nmillion
Available-for-sale
Nmillion
Other
amortised cost
Nmillion
Total carrying
amount
Nmillion
Fair value1
Nmillion
7
-
-
120,312
-
-
120,312
120,312
Assets
10
1,526
-
-
-
-
1,526
1,526
Trading assets
Derivative assets
9
40,711
-
-
-
-
40,711
40,711
Pledged assets
8
-
-
-
24,733
-
24,733
24,733
11
-
-
-
139,304
-
139,304
139,304
12
-
-
94,180
-
-
94,180
94,164
12
-
-
289,747
-
-
289,747
259,076
-
-
10,346
-
-
10,346
10,346
42,237
-
514,585
164,037
-
720,859
690,172
10
1,085
-
-
-
-
1,085
1,085
9
66,960
-
-
-
-
66,960
66,960
Deposits from banks
19
-
-
-
-
51,686
51,686
51,692
19
-
-
-
-
416,352
416,352
415,625
Subordinated debt
21
-
-
-
-
6,399
6,399
5,721
-
-
-
-
112,257
112,257
112,358
68,045
-
-
-
580,295
648,340
647,720
Liabilities
Trading liabilities
Other financial liabilities
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24. Classification of financial instruments (continued)
31 December 2012
Note
Held-for-trading
Nmillion
Designated at
fair value
Nmillion
Loans and
receivables
Nmillion
Available-for-sale
Nmillion
Other
amortised cost
Nmillion
Total carrying
amount
Nmillion
Fair value1
Nmillion
7
-
-
106,680
-
-
106,680
106,680
10
1,709
-
-
-
-
1,709
1,709
9
114,877
-
-
-
-
114,877
114,877
Assets
Derivative assets
Trading assets
8
-
-
-
24,440
-
24,440
24,440
Pledged assets
11
-
-
-
85,757
-
85,757
85,757
12
-
-
24,571
-
-
24,571
24,598
12
-
-
266,344
-
-
266,344
232,828
-
-
13,340
-
-
13,340
13,340
116,586
-
410,935
110,197
-
637,718
604,229
Liabilities
10
772
-
-
-
-
772
772
9
88,371
-
-
-
-
88,371
88,371
Deposits from banks
19
-
-
-
-
26,632
26,632
26,632
19
-
-
-
-
355,419
355,419
355,565
-
-
-
-
115,130
115,130
109,493
89,143
-
-
-
497,181
586,324
580,833
Trading liabilities
Other non-financial liabilities
Carrying value has been used where it closely approximates fair values. Fair value estimates are generally subjective in nature,
and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market
information. Where available, the most suitable measure for fair value is the quoted market price. In the absence of
organised secondary markets for financial instruments, such as loans, deposits and unlisted derivatives, direct market prices
are not always available. The fair value of such instruments was therefore calculated on the basis of well-established
valuation techniques using current market parameters. The fair value is a theoretical value applicable at a given reporting
date, and hence can only be used as an indicator of the value realisable in a future sale.
1
Wherever possible, the group compares valuations derived from models with quoted prices of similar financial instruments,
and with actual values when realised, in order to further validate and calibrate the models. These techniques involve
uncertainties and are significantly affected by the assumptions used and judgements made regarding risk characteristics of
various financial instruments, discount rates, estimates of future cash flows,future expected loss experiences and other
factors. Changes in assumptions could affect these estimates and the resulting fair values.
Derived fair value estimates cannot necessarily be substantiated by comparison to independent markets and may not be
realised in an immediate sale of the instruments.
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25 Financial instruments measured at fair value
Group
The tables below analyse financial instruments carried at fair value at the end of the reporting period, by level of fair value
hierarchy as required by IFRS 7. The different levels are based on the extent that quoted prices are used in the calculation of the
fair value of the financial instruments and the levels have been defined as follows:
Level 1 fair values are based on quoted market prices (unadjusted) in active markets for an identical instrument.
Level 2
fair values are calculated using valuation techniques based on observable inputs, either directly (i.e. as quoted prices)
or indirectly (i.e. derived from quoted prices). This category includes instruments valued using quoted market prices in
active markets for similar instruments, quoted prices for identical or similar instruments in markets that are considered
less than active or other valuation techniques where all significant inputs are directly or indirectly observable from
market data.
Level 3
fair values are based on valuation techniques using significant unobservable inputs. This category includes all
instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs
have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on
quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect
differences between the instruments.
Level 1
Level 2
Level 3
Total
Nmillion
Nmillion
Nmillion
Nmillion
-
1,709
-
1,709
31 December 2012
Assets
Derivative assets
Trading assets
-
114,877
-
114,877
Pledged assets
-
24,440
-
24,440
-
85,476
281
85,757
-
226,502
281
226,783
Held-for-trading
-
116,586
-
116,586
Designated at fair value
-
-
-
-
Available-for-sale
-
109,916
281
110,197
-
226,502
281
226,783
-
772
-
772
Trading liabilities
-
88,371
-
88,371
Other financial liabilities
-
-
-
-
-
89,143
-
89,143
Held-for-trading
-
89,143
-
89,143
-
-
-
-
-
89,143
-
89,143
Comprising:
Liabilities
Group
Level 1
Level 2
Level 3
Total
Nmillion
Nmillion
Nmillion
Nmillion
31 December 2013
Assets
Derivative assets
Trading assets
Pledged assets
Comprising:
-
1,526
-
1,526
51
40,660
-
40,711
-
24,733
-
24,733
-
139,091
213
139,304
51
206,010
213
206,274
51
42,186
-
42,237
-
-
-
-
Available-for-sale
-
163,824
213
164,037
51
206,010
213
206,274
-
1,085
-
1,085
Comprising:
Held-for-trading
Liabilities
Trading liabilities
-
66,960
-
66,960
-
68,045
-
68,045
Held-for-trading
-
68,045
-
68,045
-
-
-
-
-
68,045
-
68,045
Comprising:
There have been no transfers between Level 1 and Level 2 during the period.
There have been no transfers between Level 1 and Level 2 during the period.
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26 Offsetting of financial assets and financial liabilities
28. Supplementary income statement information
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
3,152
352
-
-
Interest on loans and advances to customers
40,234
43,497
-
-
Interest on investments
19,199
13,969
-
-
62,585
57,818
-
-
28.1 Interest income
The disclosures set out in the tables below include financial assets and financial liabilities that:
Interest on loans and advances to banks
a re subject to an enforceable master netting agreement or similar agreement that covers similar financial instruments,
irrespective of whether they are offset in the statement of financial position.
Company
Nmillion
26.1 Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements
are offset in the group’s statement of financial position; or
Group
All interest income reported above relates to financial assets not carried at fair value through profit or loss.
The group had no offsetting financial assets and liabilities as at year end.
28.2 Interest expense
27. Contingent liabilities and commitments
Group
Company
Savings accounts
373
200
-
-
Current accounts
694
580
-
-
2,741
2,816
-
-
19,599
18,636
-
-
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
Letters of credit
20,836
19,145
-
-
Term deposits
Guarantees
23,779
25,672
-
-
Interbank deposits
1,105
1,293
-
-
44,615
44,817
-
-
Borrowed funds
1,060
739
-
-
25,572
24,264
-
-
27.1 Contingent liabilities
Performance bonds and guarantees are generally short term commitments to third parties which are not directly dependent on
the customer’s credit worthiness.
Letters of credit are agreements to lend to a customer in the future, subject to certain conditions. They are secured by different
types of collaterals similar to those accepted for actual credit facilities.
Call deposits
All interest expense reported above relates to financial assets not carried at fair value through profit or loss.
28.3 Net fee and commission revenue
27.2 Capital commitments
Contracted capital expenditure
Capital expenditure authorised but not yet contracted
33,322
25,754
728
-
Account transaction fees
3,543
3,495
-
-
445
201
-
-
Card based commission
1,460
518
-
-
-
-
-
-
Brokerage and financial advisory fees
5,028
3,215
728
-
445
201
-
-
Asset management fees
16,613
12,330
-
-
Custody transaction fees
2,508
1,525
-
-
The expenditure will be funded from the group’s internal resources.
27.3 Legal proceedings
In the conduct of its ordinary course of business, the group is exposed to various actual and potential claims, lawsuits and other
proceedings relating to alleged errors and omissions, or non-compliance with laws and regulations. The directors are satisfied,
based on present information and the assessed probability of claims crystallising, that the group has adequate insurance
programmes and provisions in place to meet such claims.
There were a total of 147 legal proceedings outstanding as at 31 December 2013. 88 of these were against the group with
claims amounting to N168.63 billion (31 December 2012: N80.61 billion), while 59 other cases were instituted by the group
with claims amounting to N4.23 billion (31 December 2012: N4.9 billion).
The claims against the group are being vigorously defended. It is not expected that the ultimate resolution of any of the
proceedings will have a significant adverse effect on the financial position of the group.
Electronic banking
241
161
-
-
Foreign currency service fees
1,299
1,185
-
-
Documentation and administration fees
1,005
2,364
-
-
Other
1,625
961
-
-
(422)
(186)
-
-
32,900
25,568
728
-
Foreign exchange
6,644
4,230
-
-
Credit
1,329
1,617
-
-
Interest rates
6,911
2,241
-
-
11
3
-
-
14,895
8,091
-
-
28.4 Trading revenue
Equities
212
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Supplementary income statement information (continued)
28.5 Other revenue
Dividend income
Other
Group
The following disclosable items are included in other operating expenses:
Company
Recoveries on loans and advances previously written off
2013
2012
2013
2012
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
Nmillion
Nmillion
Nmillion
98
112
8,320
1,250
200
189
15
12
326
85
89
-
200
152
15
12
424
197
8,409
1,250
200
152
15
12
-
37
-
-
Auditors' remuneration
Audit fees
Current year
Fees for other services
3,219
7,320
-
-
(552)
(425)
-
-
Depreciation
4,053
3,410
25
-
2,667
6,895
-
-
Property
1,167
654
-
-
28
28
-
-
1,139
626
-
-
2,886
2,756
25
-
1,357
1,144
22
-
73
105
-
-
Comprising:
Net specific credit impairment charges
- Freehold
1,922
6,391
-
-
Specific credit impairment charges (note 12.3)
2,474
6,816
-
-
Recoveries on loans and advances previously written off
(552)
(425)
-
-
- Computer equipment
Portfolio credit impairment charges/(reversal) (note 12.3)
745
504
-
-
- Motor vehicles
2,667
6,895
-
-
- Office equipment
28.7 Staff costs – banking activities
Salaries and allowances
Company
Nmillion
28.6 Credit impairment charges
Net credit impairments raised and released for loans and advances
Group
- Leasehold
Equipment
103
109
3
-
- Furniture and fittings
1,353
1,398
-
-
Operating lease charges
949
1,153
3
-
22,393
19,421
456
21
245
327
-
-
1,213
205
-
-
Properties
949
1,153
3
-
23,851
19,953
456
21
Equipment
-
-
-
-
3,517
3,143
-
-
33
(49)
-
-
755
709
-
-
Premises and maintenance
3,428
4,192
-
-
Marketing and advertising
2,658
1,765
-
-
Insurance
5,543
3,366
42
-
Professional fees
4,467
6,057
107
-
Depreciation
4,053
3,410
25
-
774
797
10
-
Security
1,169
903
-
-
Travel and entertainment
1,382
1,112
30
-
Provision on contingent and other known losses
2,533
1,092
-
-
Administration and membership fees
661
196
-
-
Training
680
462
-
-
2,477
1,946
251
176
34,097
29,150
465
176
Staff cost: below-market loan adjustment
Equity-linked transactions (note 28.9)
28.8 Other operating expenses
Information technology
Communication
Stationery and printing
Other
Loss (profit) on sale of property and equipment
214
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28.9 Share-based payment transactions
A reconciliation of the movement of the share appreciation rights is detailed below:
The group operates a number of share- based payment arrangements under which the entity receives services from employees
as a consideraion for equity instrument of the group or cash settlement based on equity instrument of the group.
Units
Reconciliation
At 31 December 2013, the group had the following share-based arrangements.
Units outstanding at beginning of the year
2013
2012
219,110,923
410,832,980
(a) S hare appreciation rights based on equity instrument of Stanbic IBTC Holdings PLC (Stanbic IBTC Equity Growth Scheme) cash settled
Granted
-
-
Transferred out
-
(191,722,057)
(b) S hare options and appreciation rights based on equity instrument of Standard Bank Group (Parent company share incentive
schemes) - equity settled.
Forfeited
(42,829,525)
-
Exercised
(18,011,971)
-
Lapsed
(c) Deferred bonus scheme.
Units outstanding at end of the year
-
-
158,269,427
219,110,923
The expenses and liabilities recognised in respect of the share based arrangements are as follows:
The fair value of share appreciation rights is determined using Black-Scholes formula. The inputs used in the measurement of
their fair value were as follows:
Expenses recognised in staff costs
Stanbic IBTC Equity Growth Scheme
Parent company share incentive schemes
Deferred bonus scheme (DBS)
2013
2012
Nmillion
Nmillion
908
-
73
67
232
138
1,213
205
Liabilities recognised in other liabilities
2013
2012
Weighted average fair value at grant date (Naira) Rights granted 1 March 2010***
15.30
15.30
Weighted average fair value at grant date (Naira) Rights granted 1 March 2011***
20.06
20.06
5.07
5.07
Expected life (years)
Stanbic IBTC Equity Growth Scheme
Deferred bonus scheme
1,159
303
Expected volatility (%)
37.34
47.00
380
156
Risk-free interest rate (%)
13.09
16.00
1,539
459
Dividend yield (%)
3.75
4.00
**The Parent company share incentive scheme is equity settled. As such, a corresponding increase in equity has been recognised.
See Statement of changes in equity for further details.
(a) Stanbic IBTC Equity Growth Scheme
On 1 March 2010 and 1 March 2011, the group granted share appreciation rights to key management personnel that entitles
the employees to cash value determined based on the increase in share price of Stanbic IBTC Holdings PLC between grant date
and exercise date.
The object and purpose of the scheme is to promote an identity of interest between the group and its senior employees, to
attract, retain and motivate skilled and competent personnel with high potential to influence the direction, growth and
profitability of the group by enhancing leadership commitment and drive to grow the group market value and position in support
of shareholder interests.
The provision in respect of liabilities under the scheme amounts to NGN1,159 million at 31 December 2013.
The terms and conditions of the grants are as follows.
Vesting category
Year
% vesting
Expiry
Type A
3, 4, 5
50, 75, 100
10 Years
*During 2012, the underlying shares on which the Scheme is based was changed to that of Stanbic IBTC Holdings PLC following
the holding company restructuring executed in 2012.
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The following options granted to employees had not been exercised at 31 December 2012:
(b) Parent company share incentive schemes
Option price range
Share options and appreciation rights
A number of employees of the group participate in the Standard Bank Group’s share schemes. There are two equity-settled
schemes, namely the Group Share Incentive Scheme and the Equity Growth Scheme. The Group Share Incentive Scheme confers
rights to employees to acquire ordinary shares at the value of the Standard Bank Group share price at the date the option is
granted. The Equity Growth Scheme was implemented in 2005 and allocates appreciation rights to employees. The eventual
value of the right is settled by receipt of value of shares equivalent to the full value of the rights.
(ZAR)
(Naira)
(ZAR)
(Naira)
4,500
79,50
1463,6
79,50
1463,60
Year to 31 Dec 2016
13,200
98,00
1804,18
98,00
1804,18
Year to 31 Dec 2017
122,300
92,00
1693,72
92,00
1693,72
Year to 31 Dec 2018
62,39 - 97,15
1148,60 -1788,53
67,46
1241,94
Year to 31 Dec 2019
104,53 - 111,94
1924,40 - 2060,82
108,44
1996,38
Year to 31 Dec 2020
98,80
1818,91
99,80
1837,32
Year to 31 Dec 2021
192,500
Year
% vesting
Expiry
Type A
3, 4, 5
50, 75, 100
10 Years
Type B
5, 6, 7
50, 75, 100
10 Years
Type C
2, 3, 4
50, 75, 100
10 Years
Type D
2, 3, 4
33, 67, 100
10 Years
Type E
3, 4, 5
33, 67, 100
10 Years
72,500
469,000
(b)(ii) Equity Growth Scheme - Appreciation rights
Appreciation right price range
(b)(i) Group Share Incentive Scheme - Share options
Option price range
(ZAR)
2013
(ZAR)
Number of options
(Naira)
2012
469,000
1,100,000
Exercised
Lapsed
Transfers
Transfers
40,65-111,94
615.44-1,694.77
219,900
(580,950)
Exercised
40,65-111,94
615.44-1,694.77
(161,400)
(39,100)
Lapsed
62,39-111,94
944.58-1,694.77
(90,950)
(10,950)
436,550
469,000
Options outstanding at the end of the period
The weighted average SBG share price for the period to 31 December 2013 was ZAR115,39 (NGN1,747) (December 2012:
ZAR110.19 (NGN2,034.11)).
2013
(Naira)
Rights outstanding at beginning of the year
2013
2013
Options outstanding at beginning of the period
Option expiry period
No. of ordinary shares
64,000
The two schemes have five different sub-types of vesting categories as illustrated by the table below:
Weighted average price
1
Number of rights
2013
2012
134,725
492,875
62,39 - 111,94
944.58 - 1,694.77
111,025
(308,900)
62,39 - 111,94
944.58 - 1,694.77
(47,062)
(12,000)
62,39
944.58
(1,250)
37,250
197,438
134,725
Rights outstanding at end of the year2
1
During the period SBG 12 225 (December 2012: 2 131) shares were issued to settle the appreciated rights value.
2
t 31 December 2013 the group would need to issue 68 217 (December 2012: 40 397) SBG shares to settle the outstanding
A
appreciated rights value.
The following rights granted to employees had not been exercised at 31 December 2013:
The following options granted to employees had not been exercised at 31 December 2013:
Option price range
No. of ordinary shares
(ZAR)
(Naira)
(ZAR)
(Naira)
4,600
79,50
1,203.63
79,50
1,203.63
Year to 31 Dec 2016
7,800
98,00
1,483.72
98,00
1,483.72
Year to 31 Dec 2017
131,500
92,00
1,392.88
92,00
1,392.88
Year to 31 Dec 2018
55,100
62,39
944.58
62,39
944.58
Year to 31 Dec 2019
122,550
104,53 - 111,94
1,582.58-1,694.77
106,24
1,608.47
Year to 31 Dec 2020
115,000
98,80 - 103.03
1,495.83-1,559.87
99,72
1,509.76
Year to 31 Dec 2021
436,550
Price range
Number of rights
(ZAR)
(Naira)
(ZAR)
(Naira)
Expiry period
11,000
65,60
-
65,60
993.18
Year to 31 December 2015
22,500
79,50
-
79,50
1,203.63
19,563
98,00
-
98,00
1,483.72
34,500
92,00
-
92,00
1,392.88
64,250
62,39 -82,50
-
65,05
991.67
33,125
111,94
-
111,94
1,694.77
12,500
98,80
-
98,80
1,495.83
197,438
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The following rights granted to employees had not been exercised at 31 December 2012:
Price range
Deferred bonus scheme 2012 (DBS 2012)
In 2012, changes were made to the DBS to provide for a single global incentive deferral scheme accross the Standard Bank
Group (SBG). The purpose of the Deferred Bonus Scheme 2012 is to encourage a longer-term outlook in business decisionmaking and closer alignment of performance with long-term value creation.
Number of rights
(ZAR)
(Naira)
(ZAR)
(Naira)
7,000
65,60
1,207.70
65,60
1,207.70
10,625
79,50
1,463.60
79,50
1,463.60
16,400
98,00
1,804.18
98,00
1,804.18
22,200
92,00
1,693.72
92,00
1,693.72
51,000
62,39
1,148.60
62,39
1,148.60
27,500
111,94
2,060.82
111,94
2,060.82
All employees granted an annual performance award over a threshold have part of their award deferred. The award is indexed
to the SBG’s share price and accrues notional dividends during the vesting period, which are payable on vesting. The awards
vest in three equal amounts at 18 months, 30 months and 42 months from the date of award. The final payout is determined
with reference to the SBG’s share price on vesting date.
The provision in respect of liabilities under the scheme amounts to NGN 289 million (December 2012: NGN111 million) and
the amount charged for the period was NGN 141 million (December 2012: NGN111 million).
134,725
Units
Reconciliation
2013
2012
147,807
-
It is essential for the group to retain key skills over the longer term. This is done particularly through share-based incentive plans.
The purpose of these plans is to align the interests of the group, its subsidiaries and employees, as well as to attract and retain
skilled, competent people.
Granted
132,481
157,768
Exercised
(48,807)
-
(1,368)
(9,961)
The group has implemented a scheme to defer a portion of incentive bonuses over a minimum threshold for key management
and executives. This improves the alignment of shareholder and management interests by creating a closer linkage between risk
and reward, and also facilitates retention of key employees.
230,113
147,807
115.51
108.90
All employees, who are awarded short-term incentives over a certain threshold, are subject to a mandatory deferral of a
percentage of their cash incentive into the DBS. Vesting of the deferred bonus occurs after three years, conditional on continued
employment at that time. The final payment of the deferred bonus is calculated with reference to the Standard Bank Group share
price at payment date. To enhance the retention component of the scheme, additional increments on the deferred bonus
become payable at vesting and one year thereafter. Variables on thresholds and additional increments in the DBS are subject to
annual review by the remuneration committee, and may differ from one performance year to the next.
2.51
2.51
5.54
4.84
(c) Deferred bonus scheme (DBS)
The provision in respect of liabilities under the scheme amounts to N91 million (31 December 2012: N45 million) and the
amount charged for the year was NGN46 million (December 2012: NGN27 Million).
Lapsed
Weighted average fair value at grant date (R)
29. Emoluments of Stanbic IBTC Holdings PLC directors
2013
2012
Nmillion
Nmillion
73
265
-
-
178
74
-
-
Executive directors
Emoluments of directors in respect of services rendered1:
While directors of Stanbic IBTC Holdings PLC
- as directors of the company and/or subsidiary companies
Units
Reconciliation
2013
2012
34,494
35,612
Granted
-
-
Exercised
-
-
Lapsed
(1,012)
(1,118)
33,482
34,494
87.93
87.93
Weighted average fair value at grant date (R)
3.00
3.00
5.54
4.92
- otherwise in connection with the affairs of Stanbic IBTC Holdings PLC or its subsidiaries
Non-executive directors
Emoluments of directors in respect of services rendered:
While directors of Stanbic IBTC Holdings PLC
- as directors of the company and/or subsidiary companies
- otherwise in connection with the affairs of Stanbic IBTC Holdings PLC or its subsidiaries
Pensions of directors and past directors
1
2
4
253
343
In
order to align emoluments with the performance to which they relate, emoluments reflect the amounts accrued in respect
of each period and not the amounts paid.
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30. Taxation
Indirect taxation (note 30.1)
Direct taxation (note 30.2)
Group
30.4 Income tax recognised in other comprehensive income
Company
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
223
314
38
125
3,844
1,255
(116)
-
4,067
1,569
(78)
125
Group
30.1 Indirect taxation
Value added tax
223
101
38
-
-
213
-
125
223
314
38
125
3,844
1,255
(116)
-
6,326
3,685
2
-
(2,482)
(2,430)
(118)
-
3,844
1,255
(116)
-
-
-
-
-
Deferred tax
-
-
-
-
Current tax
-
-
-
-
3,844
1,255
(116)
-
Witholding tax
30.2 Direct taxation
Current year
Current tax
Deferred tax
Income tax recognised in other comprehensive income
Direct taxation per the income statement
The table below sets out the amount of income tax relating to each component within other comprehensive income:
Before tax
Nmillion
Tax (expense)
/benefit
Nmillion
Net of tax
Nmillion
408
-
408
(153)
-
(153)
255
-
255
3,645
-
3,645
269
-
269
3,914
-
3,914
31 December 2013
Net change in fair value of available-for-sale financial assets
Realised fair value adjustments on available-for-sale
financial assets transferred to profit or loss
31 December 2012
Net change in fair value of available-for-sale financial assets
Realised fair value adjustments on available-for-sale
financial assets transferred to profit or loss
31. Earnings per ordinary share
The calculation of basic earnings per ordinary share and diluted earnings per ordinary share are as follows:
30.3 Rate reconciliation
Group
2013
%
Group
Company
2012
%
2013
%
2012
%
Earnings attributable to ordinary shareholders (Nmillion)
The total tax charge for the year as a percentage of profit before
taxation
16
11
(1)
11
Information technology levy
(1)
(1)
-
-
Weighted average number of ordinary shares in issue (number of shares)
Education tax
(1)
(1)
-
-
Weighted average number of ordinary shares in issue
The corporate tax charge for the year as a percentage of
profit before tax
14
9
(1)
11
1
5
-
-
15
14
(1)
11
-
-
31
19
16
16
-
-
Net tax charge
The charge for the year has been reduced/(increased) as a
consequence of:
Dividend received
Income from government securities
Other non-taxable income
2013
2012
2013
2012
Nmillion
Nmillion
Nmillion
Nmillion
18,610
8,868
8,332
-
10,000
17,626
10,000
-
186
50
83
-
Earnings based on weighted average shares in issue
Rate reconciliation including indirect and direct tax
Tax relating to prior years
Company
-
-
-
-
Other permanent differences
(1)
-
-
-
Standard rate of tax
30
30
30
30
Basic earnings per ordinary share (kobo)
Diluted earnings per ordinary share
Basic earnings per ordinary share equals diluted earnings per share as there are no potential dilutive ordinary shares in issue.
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32. Statement of cash flows notes
Group
2013
Nmillion
Company
2012
Nmillion
2013
Nmillion
2012
Nmillion
32.1 Decrease/(increase) in income-earning assets
Net derivative assets
1,395
-
-
Post-employment benefits
Value of share options and rights expensed
Trading assets
74,166
(48,401)
-
-
Pledged assets
(293)
(4,939)
-
-
(95,679)
(38,588)
-
-
2,942
(11,472)
(122)
(916)
The transactions below are entered into in the normal course of business.
(18,368)
(102,005)
(122)
(916)
Loans and advances
Loans and advances
Other assets
Loans outstanding at the beginning of the year
32.2 Increase/(decrease) in deposits and other liabilities
Trading liabilities
Other liabilities and provisions
85,987
82,264
-
-
Net movement during the year
(21,411)
25,198
-
-
Loans outstanding at the end of the year
17,570
(7,217)
2,548
1,004
82,146
100,245
2,548
1,004
32.3 Cash and cash equivalents
Cash and cash equivalents (note 7)
120,312
106,680
2,722
2,625
Cash and cash equivalents at end of the year
120,312
106,680
2,722
2,625
2012
Nmillion
699
613
Key management compensation
Salaries and other short-term benefits
496
2013
Nmillion
43
49
310
67
1,052
729
422
207
(207)
215
215
422
Loans include mortgage loans, instalment sale and finance leases and credit cards. No specific impairments have been recognised
in respect of loans granted to key management (2012: nil). The mortgage loans and instalment sale and finance leases
are secured by the underlying assets. All other loans are unsecured.
2013
2012
Nmillion
Nmillion
Deposits outstanding at beginning of the year
574
1,161
143
(587)
Deposits outstanding at end of the year
717
574
33. Related party transactions
33.1 Parent and ultimate controlling party
Standard Bank Group (“SBG”) of South Africa is the ultimate holding company of Stanbic IBTC Holdings PLC.
33.2 Subsidiaries
Details of effective interest in subsidiaries are disclosed in Note 13.
Deposits include cheque, current and savings accounts.
Investments
Details of key management personnel’s investment transactions and balances with Stanbic IBTC Holdings PLC are set out below.
33.3 Key management personnel
Key management personnel includes: members of the Stanbic IBTC Holdings PLC board of directors and Stanbic IBTC Holdings
PLC executive committee. The definition of key management includes close members of key management personnel and any
entity over which key management exercise control, joint control or significant influence. Close family members are those family
members who may influence, or be influenced by that person in their dealings with Stanbic IBTC Holdings PLC. They include
the person’s domestic partner and children, the children of the person’s domestic partner, and dependents of the person
or the person’s domestic partner.
Investment products
Balance at the beginning of the year
Balance at the end of the year
Net investment return
2013
2012
Nmillion
Nmillion
46
62
(22)
(16)
24
46
13.36%
18.95%
158,269,427
219,110,923
436,550
469,000
Shares and share options held
Aggregate number of share options issued to Stanbic IBTC key management personnel:
Share options held (Stanbic IBTC Holdings PLC scheme)
Share options held (ultimate parent company schemes)
224
225
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33.4 Transactions with Ultimate Holding company (Standard Bank Group)
2013
2012
Nmillion
Nmillion
592
11
Revenue
Trading revenue
Net interest income
580
(759)
1,172
(748)
Loans outstanding at the beginning of the year
25,647
11,021
Net loans received during the year
(4,255)
14,626
Loans outstanding at the end of the year
21,392
25,647
Total revenue earned
Loans
Deposits
Deposits outstanding at the beginning of the year
49,248
79,755
Net deposits received/(repaid) during the year
50,008
(30,507)
Deposits outstanding at the end of the year
99,256
49,248
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34. Director and staff related exposures
The group has some exposures in terms of loans and advances to customers that are related to its directors and employees.
These facilities were granted at rates and terms comparable to other facilities. There were no non-performing director related
exposures as at balance sheet date.
Below is a list of directors and staff related lending as at balance sheet date.
Schedule of directors and staff related credits
Perfected security
Date granted
Expiry date
Approved
credit limit
N000
Status
Interest
rate
Security nature
Security
value
N000
Nigeria Breweries Plc
Chairman
Atedo Peterside
Term loan
23 Aug 2013
19 Feb 2014
2,000,000
2,083,258
Performing
11.02%
Negative Pledge
-
Nigeria Breweries Plc
Chairman
Atedo Peterside
Term loan
6 Sep 2013
5 Mar 2014
2,000,000
2,076,932
Performing
11.02%
Negative Pledge
-
Golden Sugar Company Limited
Chairman
Atedo Peterside
Advance
23 Dec 2013
22 Jan 2014
51,804
51,853
Performing
3.76%
Debenture on Fixed and Floating Asset
2,150,000
Chairman
Atedo Peterside
Advance
16 Dec 2013
14 Feb 2014
88,080
86,227
Performing
7.00%
2,150,000
Name of Company/Individual
Relationship
Name of
related
interest Facility type
Outstanding
plus accrued
interest
Chairman
Atedo Peterside
Overdraft
21 Nov 2013
9 Jan 2014
901,592
426,067
Performing
5.80%
2,150,000
Chairman
Atedo Peterside
Term Loan
24 Oct 2013
22 Jan 2014
38,903
39,182
Performing
15.00%
2,150,000
Chairman
Atedo Peterside
Term Loan
17 Dec 2012
23 May 2016
1,594,400
1,424,511
Performing
15.00%
2,152
Chairman
Atedo Peterside
Term Loan
13 Jul 2012
13 Jul 2022
1,854,000
1,859,689
Performing
15.00%
2,152
Chairman
Atedo Peterside
Term Loan
1 Dec 2013
31 Dec 2013
5,081,218
4,086,967
Performing
15.00%
2,152
Apapa Bulk Terminal Limited
Chairman
Atedo Peterside
Overdraft
13 Mar 2013
12 Mar 2014
480,000
318,162
Performing
15.00%
Negative Pledge
-
Flour Mills of Nigeria Plc
Chairman
Atedo Peterside
Advance
24 Sep 2013
22 Jan 2014
174,059
175,854
Performing
3.75%
Negative Pledge
-
Director
Yinka Sanni
VAF
6 Jan 2011
31 Dec 2014
3,080
1,379
Performing
26.00%
Asset Financed
3,080
Chartered Institute of Stock Brokers
Director
Yinka Sanni
VAF
6 Jan 2011
31 Dec 2014
3,080
1,379
Performing
26.00%
Asset Financed
3,080
Director
Yinka Sanni
VAF
6 Jan 2011
31 Dec 2014
3,080
1,379
Performing
26.00%
Asset Financed
3,080
Director
Yinka Sanni
VAF
6 Jan 2011
31 Dec 2014
5,856
2,617
Performing
26.00%
Asset Financed
5,856
Ex-Non Executive Director
Ahmed I Dasuki
Term Loan
30 Mar 2012
31 Dec 2015
15,000,000
7,478,491
Performing
14.34%
Negative Pledge
-
MTN Nigeria Communication Ltd
MTN Nigeria Communication Ltd
Ahmed I Dasuki
Term Loan
22 May 2013
30 Nov 2019
2,500,000
1,669,339
Performing
14.04%
Negative Pledge
-
PPC Limited
Ex-Non Executive Director Sam U Unuigbe/Ahmed I Dasuki
VAF
20 Jan 2012
29 Jan 2015
3,488
1,554
Performing
24.00%
Asset Financed
3,488
PPC Limited
VAF
20 Jan 2012
29 Jan 2015
3,488
1,554
Performing
24.00%
Asset Financed
3,488
PPC Limited
VAF
20 Jan 2012
29 Jan 2015
3,488
1,554
Performing
24.00%
Asset Financed
3,488
PPC Limited
VAF
20 Jan 2012
29 Jan 2015
3,638
1,621
Performing
24.00%
Asset Financed
3,638
PPC Limited
VAF
20 Jan 2012
29 Jan 2015
3,638
1,621
Performing
24.00%
Asset Financed
3,638
PPC Limited
VAF
20 Jan 2012
29 Jan 2015
3,638
1,621
Performing
24.00%
Asset Financed
3,638
Lilian Ifeoma Esiri
Ifeoma Esiri
Credit Card
15 Apr 2013
15 Apr 2016
7,178
72
Performing
30.00%
-
Chairman
Atedo Peterside
Credit Card
15 Apr 2013
15 Apr 2016
7,178
139
Performing
30.00%
-
Staff
Various Staff
Staff Loan
8,441,925
6,056,957
Performing
40,256,811
27,851,979
Atedo Peterside
Various Staff
Total
8,642,930
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c) Disclosure on diversity in employment
Off balance sheet engagements
Relationship
Name of Company
Name of related
interest
Facility type
Outstanding
N000
Status
268,000
Performing
Chairman
Atedo Peterside Bond and Guarantee
Flour Mills of Nigeria
Chairman
Atedo Peterside
Letters of credit
12,124
Performing
Chairman
Atedo Peterside
Letters of credit
15,711
Performing
Cadbury Nigeria PLC
Chairman
Atedo Peterside
Letters of credit
836
Performing
Cadbury Nigeria PLC
Chairman
Atedo Peterside
Letters of credit
168
Performing
Cadbury Nigeria PLC
Chairman
Atedo Peterside
Letters of credit
854
Performing
Total
The group is an equal opportunity employer that is committed to maintaining a positive work environment that facilitates high
level of professional efficiency at all times. The group’s policy prohibits discrimination of gender, disabled persons or persons
with HIV in the recruitment, training and career development of its employees.
i) Persons with disability:
The group continues to maintain a policy of giving fair consideration to applications for employment made by disabled persons
with due regard to their abilities and aptitude.
ii) Gender diversity within the group
297,695
31 December 2013
35. Retirement benefit obligations
The group operates a defined contribution pension scheme in line with the provisions of the Pension Reform Act 2004, with
contributions based on the sum of employees’ basic salary, housing and transport allowances in the ratio 7.5% by the employee
and 7.5% by the employer. The amount contributed by the group and remitted to the Pension Fund Administrators during
the period was N1,397 million (2012: N1,444 million).
The group’s contribution to this scheme is charged to the income statement in the period to which it relates. Contributions to
the scheme are managed by Stanbic IBTC Pension Managers Limited, and other appointed pension managers on behalf of the
beneficiary staff in line with the provisions of the Pension Reform Act. Consequently, the group has no legal or constructive
obligations to pay further contributions if the funds do not hold sufficient assets to meet the related obligations to employees.
Workforce
% of gender
composition
31 December 2012
Workforce
% of gender
composition
Total workforce:
Women
Men
830
40%
884
41%
1,247
60%
1,269
59%
2,077
100%
2,153
100%
Recruitments made during the year:
Women
Men
94
32%
44
41%
200
68%
64
59%
294
100%
108
100%
3
23%
3
21%
10
77%
11
79%
13
100%
14
100%
1
20%
1
20%
36. Employees and Directors
a) Employees
Group
2013
Number
2012
Number
The average number of persons employed by
the group during the year by category:
Executive directors
Management
Non-management
Diversity of members of board of directors –
Number of Board members
Women
Men
5
5
429
454
1,643
1,694
2,077
2,153
Diversity of board executives –
Number of Executive directors to Chief executive officer
Women
Men
Below N1,000,001
-
5
N1,000,001– N2,000,000
13
61
N2,000,001– N3,000,000
345
574
N3,000,001– N4,000,000
91
358
N4,000,001– N5,000,000
545
359
N5,000,001– N6,000,000
341
182
N6,000,001 and above
742
614
2,077
2,153
4
80%
4
80%
5
100%
5
100%
Women
23
28%
21
27%
Men
60
72%
56
73%
83
100%
77
100%
Diversity of senior management team –
Number of Assistant General Manager to General Manager
230
231
Annexure A: Statement of value added
Group
2013
Nmillion
Gross earnings
Company
2012
%
111,226
Nmillion
2013
%
91,860
Nmillion
Group
2012
%
9,137
Nmillion
%
foreign
(22,971)
-
-
24,733
24,440
19,501
18,573
-
-
-
139,304
85,757
88,877
29,203
-
-
-
Loans and advances to
banks
94,180
24,571
46,051
33,291
-
-
-
Loans and advances to
customers
289,747
266,344
256,720
176,679
-
-
-
7,716
5,212
2,668
1,696
118
-
-
Deferred tax assets
-
-
-
-
-
-
-
Equity Investment in group
companies
-
-
-
-
68,951
68,951
-
19,829
22,771
11,299
16,375
1,038
916
-
-
-
5,036
4,559
-
-
-
24,988
24,458
24,724
25,645
2,572
16
-
763,046
676,819
554,507
387,218
75,401
72,508
-
5,000
5,000
9,375
9,375
5,000
5,000
-
90,562
78,341
70,492
76,227
66,846
66,503
-
2,072
2,310
1,911
1,376
-
-
1,085
772
749
-
-
-
-
Trading liabilities
66,960
88,371
63,173
50,116
-
-
-
Deposits from banks
51,686
26,632
12,545
6,232
-
-
-
(4,875)
-
(48)
(30,466)
(25,926)
(440)
(51)
Provision for losses
(2,667)
(6,895)
-
-
Value added
52,521
Current and deferred tax
assets
1,199
Distribution
Other assets
Employees and Directors
21
2
Intangible assets
Government
3,844
7
1,255
4
(116)
(1)
-
(3,228)
Taxation
2,625
-
(3)
5
2,722
-
(440)
456
10,048
-
Pledged assets
57
30,074
-
-
19,953
106,680
263
-
45
120,312
70,886
(24,264)
23,851
2011
Nmillion
3,081
(21,051)
Salaries and benefits
2012
Nmillion
66,476
(25,572)
100
2013
Nmillion
1,709
-
8,697
2010
Nmillion
114,877
-
100
2011
Nmillion
1,526
(1,293)
34,775
2012
Nmillion
40,711
(1,179)
100
2013
Nmillion
Derivative assets
Trading assets
(27,238)
foreign
Company
-
Administrative overhead:
local
Other
information
Assets
1,250
(24,393)
Market
Annual&reports
Shareholder
and
information
financial
statements
Annexure B: Financial summary
Interest paid:
local
Business
review
Overview
125
10
Equity and liabilities
Share capital
The Future
Asset replacement (depreciation)
Expansion (retained in the business)
Total
4,053
3,410
25
-
-
20,773
10,157
8,332
1,053
-
24,826
47
13,567
39
8,357
96
1,053
88
52,521
99
34,775
100
8,697
100
1,199
100
Reserves
416,352
355,419
287,242
186,118
-
-
-
Other borrowings
48,764
66,873
47,618
18,272
-
-
-
Subordinated debt
6,399
-
-
-
-
-
-
Current and deferred tax
liabilities
7,788
4,844
5,187
4,703
2
-
-
66,378
48,257
56,215
34,799
3,553
1,005
-
763,046
676,819
554,507
387,218
75,401
72,508
-
44,615
44,817
37,752
14,861
-
-
-
Other liabilities
Acceptances
and guarantees
232
233
Overview
Group
2013
Nmillion
2012
Nmillion
Company
2011
Nmillion
2010
Nmillion
2013
Nmillion
2012
2011
Nmillion
Nmillion
Income Statement
Net operating income
85,232
67,410
55,247
9,137
1,250
-
(60,392)
(55,998)
(45,141)
(921)
(72)
-
Profit before tax
24,617
11,412
10,106
8,216
1,178
-
Taxation
(4,067)
(1,255)
(3,463)
-
(125)
-
Profit after taxation
20,773
10,157
6,643
8,216
1,053
-
2,163
1,289
976
-
-
-
Equity holders of the
parent
18,610
8,868
5,667
8,216
1,053
-
Profit for the period
20,773
10,157
6,643
8,216
1,053
-
186k
50k
30k
83k
11k
-
Operating expenses and
provisions
Profit attributable to :
Statistical Information
Earnings per share (EPS) basic/diluted
Business
review
Market
Annual&reports
Shareholder
and
information
financial
statements
Other
information
234
235
Other information
Overview
Business
review
Annual report and
Other
information
Other information
Other information
236
240
245
Management team
Branch network
Contact information
236
237
Business
review
Overview
Other information
Annual report and
Other
information
Management team
Adesola Adegbesan
Jumoke Adejumobi
Adeleke Adekoya
Shuaibu Audu
Kobby Bentsi-Enchill
Bunmi Dayo-Olagunju
Global Markets
Financial Institutions
E-Business
Chief executive: Stanbic
IBTC Investments Ltd
Stanbic IBTC Capital Ltd
Stanbic IBTC Pension
Managers Ltd
Aderenle Adesina
Ayo Adio
Olaronke Agunbiade
Olu Delano
Steve Elusope
Eric Fajemisin
Research
Personal markets
Group real estate
services
Corporate Banking
Executive director: Stanbic
IBTC Pension Managers Ltd
IBTC Pension Managers Ltd
Aishah Ahmad
Folasope Aiyesimoju
Oyinda Akinyemi
Samir Gadio
Abiodun Gbadamosi
Olufunke Isichei
HNIs
Research
PBB Channels
Customer Experience
238
239
Business
review
Overview
Other information
Annual report and
Other
information
Management team
Busola Jejelowo
Dele Kuti
Anton Marias
Lloyd Onaghinon
Ruby Onwudiwe
Olumide Oyetan
IBTC Stockbrokers Ltd
Oil , Gas and Renewables
Corporate Banking
Business Banking
Information Technology
Chief executive: Stanbic IBTC
Asset management Ltd
Binta Max-Gbinije
Yusufu Modibbo
Charles Molteno
Akeem Oyewale
Babayo Saidu
Segun Sanni
IBTC Trustees Ltd
Public Sector
PBB Credit
IBTC Nominees Ltd
Non-interest Banking
IBTC Nominees Ltd
Samuel Ocheho
Bunmi Odunowo
Soji Omisore
Dele Sotubo
Adeola Soyoye
Joyce Uredi
Global Markets
Country operations
Mining, Energy
and Infrastructure
IBTC Stockbrokers Ltd
Procurement
Personal Markets
240
241
Overview
Other information
Business
review
Annual report and
Other
information
Branch network
FCT Abuja region
Lagos
Island region
Lagos Mainland region
1. Ahmadu Bello Way branch
Plot 1049, Ahmadu Bello Way
Area 11, Garki, Abuja
1. Adetokunbo Ademola branch
No. 76, Adetokunbo Ademola street
Victoria Island, Lagos
1. Abule Egba Branch
633, Lagos Abeokuta Expressway
Abule Egba, Lagos
2. Deidei branch
Deidei-Gwaga road
Deidei Abuja
2.
Afribank Street branch
Churchgate Towers
Plot 30, Afribank street
2. Agege branch
173, Old Abeokuta motor road
Agege, Lagos
3.
Ajah branch
Mega Wave Plaza
4A Addo roundabout
Off Badore road, Ajah
Lagos
3.
Edo House branch
No. 75, Ralph Sodeinde street
Central Business District
Garki, Abuja
4. Garki Area 3 branch
11 Kaura Namoda street off
Faskari crescent
Garki Area 3, Abuja
5. Garki Model Market branch
Plot CBN 2 Ladoke Akintola bvld
Garki 11, Abuja
6.Grand Tower Mall Branch
Shop 10, Grand Tower Mall
Apo, Abuja
7. Gwagwalada branch
Plot 415, Specialist Hospital road
Gwagwalada, Abuja
8. Kubwa branch
Plot No. CM71/72 Gado Nasko road
Kubwa, Abuja
9. Maitama branch
Plot 2777, Cadastral Zone A6
Maitama District, Abuja
10. NNPC Complex branch
Herbert Macaulay way
Abuja
11. Utako branch
Plot 37, Ekunkinam street
(Opposite ABC Transport)
Utako, Abuja
12. Wuse 11 branch
Plot 1387, Aminu Kano crescent
Wuse 11, Abuja
4. Ajose Adeogun branch
Plot 290E Ajose Adeogun street
5. Awolowo Road branch
No. 85, Awolowo road, Ikoyi
Lagos
6. Federal Palace Hotel branch
Ahmadu Bello way
7. Idejo branch
Plot 1712, Idejo street
8. Idumagbo branch
No. 16, Idumagbo Avenue
Lagos
9.
Ikota branch
Shop 167-194, Block 1
Ikota Shopping Complex
Ajah, Lagos
10. Karimu Kotun branch
Plot 1321B, Karimu Kotun street
11. Lekki Admiralty branch
Plot A Block 12E, Admiralty way
Lekki Phase 1
Lekki ,Lagos
12. Lekki-Ajah Expressway branch
Km 18, Lekki-Epe Expressway
Agungi, Lekki
Lagos
13. Lekki Phase 1 branch
The Palms Shopping Complex
Lekki, Lagos
14. Martins Street branch
No. 19, Martins Street
Lagos
15. Oke Arin branch
120, Alakoro Street, Oke Arin
Lagos Island, Lagos
16. Walter Carrington branch
IBTC Place
Walter Carrington Crescent
3. Aguda Branch
1/3 Enitan Street, Aguda
Surulere, Lagos
4. Ajegunle branch
No. 11, Orodu street
Ajegunle, Lagos
5. Akoka branch
No. 100, St. Finbarr’s road
Akoka, Lagos state
6. Alaba branch
H48/H49
Alaba international market
Ojo, Lagos
7. Alausa branch
WAPCO Building, Alausa
Ikeja, Lagos
8. Allen Avenue branch
No. 80, Allen Avenue
Ikeja, Lagos
9.
Balogun Business Association branch
Executive plaza, No.12, BBA market
Trade fair complex
Badagry, Lagos
10. Daleko branch
Bank road, Daleko market
off Isolo road
Mushin, Lagos
11. Egbeda branch
38, Shasha road
Egbeda, Lagos
12. Ejigbo branch
Isolo ikotun road
Ejigbo, Lagos
13. Festac branch
Gacoun shopping plaza
23 road, off 2nd avenue
Festac town, Lagos
14.Gbagada Branch
Plot 15, Diya Street Gbagada
Kosofe, Lagos
15. Gbaja market branch
No. 12, Gbaja market
Surulere, Lagos
16. Herbert Macaulay branch
No. 220, Herbert Macaulay way
Yaba, Lagos
17. Igando branch
No. 51, Lasu-Iba road
Igando, Lagos
North Central region
18. Ikeja City Mall branch
Shop L55, Ikeja City Mall
(Opposite Elephant House)
Alausa, Ikeja, Lagos
36. Osolo Way branch
Ajao Estate
(Beside ASCON Filling station)
Isolo, Lagos
19. Ikorodu branch
No. 108, Lagos road
Ikorodu, Lagos
37. Oyingbo branch
7, Coates street, Ebute metta
Oyingbo, Lagos
20. Ikotun branch
45 Idimu road
Ikotun, Lagos
38. Palms Avenue branch
103, Ladipo street
Mushin, Lagos
21. Ipaja branch
142, Ipaja road
Baruwa-Ipaja
Lagos
39. Shomolu branch
22 Market street
Shomolu, Lagos
22. Ketu branch
463, Ikorodu road
Ketu, Lagos
23. Lawanson branch
35, Lawanson road
Lawanson, Lagos
24. Maryland branch
10, Mobolaji Bank Anthony way
Maryland, Lagos
25.NAHCO Complex
NAHCO Complex, MMIA
Ikeja, Lagos
40. Surulere branch
39, Adeniran Ogunsanya street
Surulere, Lagos
41. Tejuosho branch
77, Ojuelegba road
Yaba, Lagos
42. Tin can branch
Suite 7 and 27, container complex
Lagos
43. Toyin street branch
No. 36A, Toyin street
Ikeja, Lagos
26. Nigeria Ports Authority branch
Account block, NPA
Wharf road, Apapa, Lagos
44. Trade fair branch
International trade fair complex
ASPAMDA plaza
Alaba, Lagos
27. Oba Akran branch
No. 20, Oba Akran Avenue
Ikeja, Lagos
45. Warehouse road branch
No. 10/12, Warehouse road
Apapa, Lagos
28. Ogba branch
No. 32, Ijaiye road
Ogba, Lagos
46. Yinka folawiyo branch
No. 38, warehouse road
Folawiyo plaza
Apapa, Lagos
29. Ogudu branch
54 Ogudu-Ojota road
Ogudu, Lagos
30. Ojodu branch
102 Isheri road
Ojodu Berger, Lagos
31. Ojuwoye branch
No. 214, Agege motor road
Ojuwoye, Mushin, Lagos
32. Oko-Oba branch
Abattoire Market, New Oko Oba
Agege, Lagos
33. Okota branch
Adenekan Mega Plaza
Okota, Isolo
Lagos
34. Opebi branch
No. 43, Opebi road
Ikeja, Lagos
35. Oshodi branch
Plot 14A – Oshodi Apapa Express way
Lagos
1. Bauchi Branch
16, Yandoka Road, Bauchi
Bauchi State
2. Jos branch
No.34, Ahmadu Bello way
Jos, Plateau state
3. Kontagora branch
Lagos-Kaduna road
Kontagora
Niger State
4. Lokoja branch
IBB Way, Opposite new Specialist Hospital
Lokoja, Kogi State
5. Mararaba Branch
Shop No 1A Kwad Shopping Complex
at Mararaba Gurku along Keffi
Abuja
6. Minna branch
Paiko road, Minna
Niger State
7.
Nyanyan branch
Bomma Plaza
Abuja-Keffi expressway, Nyanyan
Nassarawa State
8.
Suleja branch
Minna road
Opposite Forec A Division, Suleja
Niger State
242
243
Overview
Other information
Business
review
Annual report and
Other
information
Branch network (continued)
North East region
North West region
1. Bauchi branch
1. Bello road branch
No. 16, Yandoka road
No. 13, Bello road, Kano
Bauchi state
Kano state
19. Samaru branch
2 Sokoto road, Samaru
Zaria, Kaduna state
South East region
1. Aba Main branch
No. 7, Aba-Owerri road
Abia state
20. WATT Market branch
CITA House Complex, 54 Bedwell Street
Calabar
2. Aba Market branch
No. 7, Duru Street, off Cemetry road
Aba, Abia state
21. Warri branch
84, Warri/Sapele Road, Warri
Delta State
2. Damaturu branch
Plot 591A, Njiwaji layout
Damaturu, Yobe state
2. Birnin-Kebbi branch
No. 68, Ahmadu Bello Way
Birnin-Kebbi, Kebbi state
3. Gombe branch
No. 1, Biu road
Gombe state
3. Dutse branch
Plot 14/15, Sanni Abacha Way
Dutse, Jigawa state
4. Jalingo branch
22 Hammaruwa way, Jalingo
Taraba State
4. Gusua branch
No. 10 Sanni Abacha road
Gusua, Zamfara state
5. Lafia Branch
Plot 1, Jos road, Lafia
Nassarawa State
5. Hotoro market branch
No. 4 Maiduguri road, Kano
Kano state
6. Maiduguri branch
No. 38, Baga road
Maiduguri, Borno State
7. Kachia road branch
No. 7A, Kachia road, Kaduna south
Kaduna state
7. Markurdi Branch
No 12, Ali Akilu road
Makurdi,Benue state
8. Kaduna branch
No. 14, Ahmadu Bello Way
Kaduna, Kaduna state
7. Awka branch
No. 49, Zik avenue
Awka, Anambra state
8. Otukpo Branch
Enugu-Markurdi road,Otukpo
Benue State
9.
8. Benin City branch
71, Apkakpava Street, Benin City
Edo State
9. Yola branch
No. 1, Muhammad Mustapha way
Jimeta, Yola, Adamawa State
Kaduna Central Market branch
No. 001 Bayajida road
Central Market, Kaduna North
Kaduna state
10. Kasuwa Barci branch
AH6 Kasuwa Barci, Tundun Wada
11. Katin Kwari branch
71A, Fagge ta Kudu (Opposite Kanti Kwari Market)
Kano, Kano State
13. Katsina branch
No. 175, Kurfi House, IBB Way
Katsina, Katsina state
12. Kawo Mando branch
Kawo-Zaria road
Kawo Market, Kaduna
Kaduna State
14. KSC Bank road branch
No. 4 Bank Road
Kano, Kano state
15. PPMC/NNPC branch
Kaduna Refining and
Petrochemical complex
Sabon Tasha road, Kaduna South
Kaduna state
16. Sabon Gari branch
7A, Amino road
Sabongari, Zaria
Kaduna State
17. Sabon Gari branch
No. 4A Galadima Road
Sabon Gari, Kano
18. Sabon Tasha branch
No. 32, Kachia road, Sabon Tasha
20. Shauchi branch
1, Rimi Quarters, Umma Bayero road
Kano, Kano state
21. Sokoto branch
No. 8, Maiduguri road
Sokoto, Sokoto state
22. Zaria branch
No. 9, Kaduna road
Zaria, Kaduna state
23. Zaria City branch
No. 90 Anguwan
Mallam Sule Kasuwa
Zaria, Kaduns State
3. Abakaliki branch
10 Ogoja road,Abakaliki
Ebonyi State
4 Airport road branch
23, Ogunu – Airport Road, Warri
Delta State
5. Ariaria Market branch
189 Faulks road, Ariaria market
Aba, Abia state
6. Asaba branch
206, Nnebisi Road
Asaba
9. Calabar branch
71, Ndidem Isong Road, Calabar
Cross River State
10. Enugu branch
No. 252, Ogui Road
Enugu, Enugu state
11. Enugu Polo Mall branch
Shop 54, Polo Park Mall
Abakaliki road, Enugu
Enugu State
12. Head-bridge branch
No. 56, Port Harcourt road
Onitsha, Anambra state
13. Ikom branch
28 Calabar Road, Ikom
Cross River State
14. New Benin branch
136, Upper Mission Road
New Benin Market, Benin
15. Onitsha branch
No. 13, Bright street
Onitsha, Anambra state
16. Owerri branch
No. 8, Wetheral road
Owerri, Imo state
17 Sapele road branch
No. 131A Sapele Road, Benin
Edo State
18. Umuahia branch
2 Market road, Umuahia
Abia State
19 Uniben – Ugbowo branch
Bank Road, University of Benin
Edo state
South South region
1. Aba Road PH branch
171, Aba Road
Port Harcourt
2.
Artillery branch
234, Aba road
Artillery, Port Harcourt
Rivers State
3. Eleme Petrochemical branch
EPCL Complex
Port Harcourt, Rivers state
4. Olu Obasanjo branch
No. 133A, Olu Obasanjo road
5. Olu Obasanjo road branch
No. 58, Olu Obasanjo Road
6.
Onne branch
Oil and Gas Free Zone Authority
Federal Ocean Terminal road, Onne
Rivers State
7. Oyigbo branch
Aba – Port Harcourt road, Oyigbo
Rivers State
8. Port Harcourt Airport branch
International Airport, Port Harcourt
Rivers state
9. Trans Amadi branch
No. 7, Trans Amadi road
10. Trans Amadi 2 branch
87 Trans Amadi road
Port Harcourt
Rivers State
11. Uyo Branch
No. 5B, Nwaniba road
Uyo, Akwa Ibom state
12. Yenagoa branch
No. 623, Mbiama-Yenagoa road
Yenagoa, Bayelsa state
244
245
Branch network (continued)
South West region
1. Abeokuta branch
No. 2A , Lantoro road, Isale-Ake
Abeokuta, Ogun state
2. Ado –Ekiti branch
Ado/Iyin express (old secretariat) rd
Ado- Ekiti, Ekiti state
4.
Agodi Gate branch
Inaolaji Business Complex
Agodi Gate, Ibadan
Oyo state
20. New Gbagi Market branch
Bashmur and Ayimur Plaza
Old Ife road, Gbagi
Ibadan, Oyo state
5.
Akure branch
Great Nigerian Insurance House
Owo/Ado Ekiti road
Akure, Ondo State
21. Ogbomosho branch
Ogbomosho Ilorin road, Ogbomosho
Oyo State
7.
Apata branch
Abeokuta-Ibadan road
Apata, Ibadan
Oyo state
8.
Bodija market branch
Trans Wonderland
Opposite Bodija market
Secretariat road, Bodija
Ibadan, Oyo state
9. Gbagi branch
No. 15, Jimoh Odutola street
Ogunpa/Dugbe
Ibadan, Oyo state
10. Ibadan Main branch
UCH/Secretariat road
Total Garden, Ibadan
Oyo state
11. Ife branch
No. 5 Obalofun Lagere road
Lagere junction, Ile–Ife
Osun state
12. Ijebu-Ode branch
58 Ibadan road,
Ijebu-Ode, Ogun state
13. Ilesha branch
A198 Oshogbo road
Ishokun, Ilesha
Osun state
14. Ilorin Branch
N011, Unity Road (Amosan House)
Ilorin, Kwara State
15. Iwo Town branch
147, Ejigbo Road, Araromi – Sabo
Iwo Town, Osun State
16. Iwo road branch
32 Iwo road, (beside Tantalizers)
Ibadan, Oyo state
Other
information
Contact information
18. Kwara Mall branch
Kwara Mall, Ilorin
19. Mokola branch
No. 18B, Oyo road,
Mokola, Ibadan
Oyo state
Aleshinloye branch
Shop 37-39, Nigerian Army Post
Service Housing Scheme, Phase 2
Eleyele road, Ibadan
Oyo state
Annual report and
17. Iyana Church branch
Ibitola Plaza, Iyana Church
Ibadan, Oyo state
3. Agbara branch
Agbara Estate Shopping Mall
Agbara, Ogun state
6.
Business
review
Overview
Other information
22. Ojatuntun branch
A171 Abdulazeez Attah Road, Surulere
Ilorin, Kwara State
23. Ondo branch
62, Yaba road, Ondo
Ondo State
Henry Anah
Arthur Oginga
Investor Relations
T: +234 1 4228742
E: [email protected]
T: +234 1 4228746
24. Orita Challenge branch
No 127 Orita challenge
Ibadan, Oyo state
25. Oshogbo branch
No. 201, Gbogan/Ibadan road
Oshogbo, Osun state
26. Oyo Town branch
Oyo- Ogbomosho road, beside Oyo East Local Government Secretariat
Oyo Town, Oyo state
27. Ring road branch
18, Moshood Abiola Way
Ring road, Ibadan
Oyo state
28. Sagamu branch
167, Akarigbo street
Sagamu, Ogun state
29. Saki branch
Sango-Ajegunle road (beside Saki
West Local Government secretariat)
Saki, Oyo state
Chidi Okezie
Olufunke Isichei
Company secretary
Customer Experience
30. Sango-Otta branch
No. 101, Idi-iroko/Otta road
Sango –Otta, Ogun state
T: +234 1 4228695
T: +234 1 4228559
31. Sango Otta 2 branch
KM 38 Abeokuta Expressway
Sango Otta, Ogun state
31. Sapon branch
House 42a, Isale Igbehin
Sapon Abeokuta
Ogun state
32. University of Ibadan road branch
Sayora Building
University of Ibadan road
Ibadan, Oyo State
Registered address:
I.B.T.C. Place
Walter Carrington Crescent
P. O. Box 71707
Victoria Island
Lagos
Nigeria
www.stanbicibtc.com
Designed and produced by Creative Interpartners, London
Email: [email protected]
Photography: Centaur Photographers
Stanbic IBTC Holdings PLC
RC1018051

Stanbic IBTC Holdings PLC Annual report

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